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A Study of Underwriters' Experience With Unseasoned New Issues

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  • Neuberger, Brian M.
  • Hammond, Carl T.

Abstract

One of the phenomena on Wall Street during the sixties was the new issues market. During the decade new issues became a popular investment alternative, particularly in the bull markets of 1962, 1966, and 1968. The height of enthusiasm occurred in the hot new issues market of the fiscal year 1968–1969 when 2,171 issues were offered to the public. This interest in new issues was followed by studies such as Reilly and Hatfield [12], McDonald and Fisher [9], the SEC [13], and others, all of which show that there is a downward bias in the issue price of new issues. Why this downward bias is present was treated later by Logue [5]. Although these studies also suggest that there is a difference in the pricing behavior by individual underwriters, none of the previous studies has addressed itself specifically to this point.

Suggested Citation

  • Neuberger, Brian M. & Hammond, Carl T., 1974. "A Study of Underwriters' Experience With Unseasoned New Issues," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 9(2), pages 165-177, March.
    • Handle: RePEc:cup:jfinqa:v:9:y:1974:i:02:p:165-177_01
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    Cited by:

    1. Dev Prasad & George S. Vozikis & Garry D. Bruton & Andreas Merikas, 1996. "“Harvesting†through Initial Public Offerings (IPOs): The Implications of Underpricing for the Small Firm," Entrepreneurship Theory and Practice, , vol. 20(2), pages 31-41, January.
    2. Satyendra Kumar Sharma & Ankit Seraphim, 2010. "The Relationship between IPO Underpricing Phenomenon & the Underwriter’s Reputation," Romanian Economic Journal, Department of International Business and Economics from the Academy of Economic Studies Bucharest, vol. 13(38), pages 181-209, December.
    3. Adler Haymans Manurung & Edhi Juwono & Indra Siswanti, 2019. "Behavior of Initial Return in Indonesia Market," Journal of Applied Finance & Banking, SCIENPRESS Ltd, vol. 9(4), pages 1-3.
    4. Mike Siew Wei Leong & Sheela Devi Sundarasen, 2015. "Ipo Initial Returns And Volatility: A Study In An Emerging Market," The International Journal of Business and Finance Research, The Institute for Business and Finance Research, vol. 9(3), pages 71-82.
    5. Anna Vong, 2006. "Rate of subscription and after-market volatility in Hong Kong IPOs," Applied Financial Economics, Taylor & Francis Journals, vol. 16(16), pages 1217-1224.
    6. Othman Yong & Zaidi Isa, 2003. "Initial performance of new issues of shares in Malaysia," Applied Economics, Taylor & Francis Journals, vol. 35(8), pages 919-930.
    7. Mary Robinson & Richard Robinson, 2012. "Dutch-auction IPOs: institutional development and underpricing performance," Journal of Economics and Finance, Springer;Academy of Economics and Finance, vol. 36(3), pages 521-554, July.
    8. Vong, Anna P.I. & Trigueiros, Duarte, 2010. "The short-run price performance of initial public offerings in Hong Kong: New evidence," Global Finance Journal, Elsevier, vol. 21(3), pages 253-261.
    9. Anna Vong & N. Zhao, 2008. "An examination of IPO underpricing in the growth enterprise market of Hong Kong," Applied Financial Economics, Taylor & Francis Journals, vol. 18(19), pages 1539-1547.

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