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Issue Size Choice and “Underpricing” in Thrift Mutual‐to‐Stock Conversions
Author(s) -
MAKSIMOVIC VOJISLAV,
UNAL HALUK
Publication year - 1993
Publication title -
the journal of finance
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 18.151
H-Index - 299
eISSN - 1540-6261
pISSN - 0022-1082
DOI - 10.1111/j.1540-6261.1993.tb05124.x
Subject(s) - stock (firearms) , business , economics , initial public offering , monetary economics , value (mathematics) , consumption (sociology) , financial economics , mechanical engineering , machine learning , computer science , engineering , social science , sociology
Issue size choice and underpricing in mutual‐to‐stock conversions of thrifts are explained as a function of growth opportunities, perquisite consumption, and proprietary information. We provide evidence that thrifts with greater growth opportunities choose larger issue size and experience higher after‐market price appreciation. This finding persists when we allow for investors' inferences about managers' proprietary information. Variables that explain underpricing in typical initial public offerings are significant by themselves but lose significance when combined with the issue size choice variables. Managerial holdings and the offer price do not act as dissipative signals of value in thrift conversions.