ICEF/LFE Research Seminar by Taufique Samdani (IESEG)

On Thursday, June 30 at 5.30 pm, room 3211 (Shabolovka str. 26) ICEF and LFE will hold the Research Seminar in Finance.
Speaker: Taufique Samdani (IESEG)
Theme: "Investor Protection and Institutional Investors’ Incentive for Information Production" joint with Sagi Akron

Abstract: We exploit a quasi-experimental setting to demonstrate that non-discretionary allocation of book-building initial public offering (IPO) shares incentivizes institutional investors to understate the value of IPO shares in the primary market so they can profit from mispricing in the secondary market, thereby increasing IPO underpricing. Conversely, discretionary allocation of book-building IPO shares incentivizes well-informed institutional investors to truthfully disclose their private information about the IPO in the primary market, thereby decreasing IPO underpricing. Our empirical framework, which elucidates an important facet of underwriters’ risk in firm-commitment contracts, reveals a market-specific allocation policy tradeoff; between information production and investor protection.

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