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Underwriting in the Australian IPO markets: Determinants and pricing

Author

Listed:
  • Alastair Marsden

    (Formerly with The University of Auckland, Auckland, New Zealand)

  • Zoltan Murgulov

    (Department of Banking and Finance, Monash Business School, Monash University, Melbourne, VIC, Australia)

  • S Ghon Rhee

    (Department of Finance, Shidler College of Business, University of Hawai’i, Honolulu, HI, USA)

  • Madhu Veeraraghavan

    (T.A. Pai Management Institute, Manipal Academy of Higher Education, Manipal, India)

Abstract

We examine the factors that explain the underwriting decision and underwriting fees for Australian initial public offerings (IPOs). Using a sample of Australian IPOs, spanning the period 1999–2019, we document the following results. IPOs that allow oversubscription of the shares, bookbuild offers, and IPOs with a greater delay to listing, are less likely to be underwritten. We also find that more prestigious underwriters are associated with greater IPO underpricing, while charging lower percent underwriting fees. Prestigious underwriters capture side benefits associated with their reputational status by offering their clients or favoured investors with discounted shares. JEL Classification: G12, G19, G38

Suggested Citation

  • Alastair Marsden & Zoltan Murgulov & S Ghon Rhee & Madhu Veeraraghavan, 2024. "Underwriting in the Australian IPO markets: Determinants and pricing," Australian Journal of Management, Australian School of Business, vol. 49(3), pages 403-427, August.
    • Handle: RePEc:sae:ausman:v:49:y:2024:i:3:p:403-427
    DOI: 10.1177/03128962221139728
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    More about this item

    Keywords

    Australian Securities Exchange; bookbuild; initial public offerings; underwriting;
    All these keywords.

    JEL classification:

    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • G19 - Financial Economics - - General Financial Markets - - - Other
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation

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