 | IPO allocation policies favor institutional investors
both in the U.S. and worldwide. |
| Constraints on the discretion bankers exercise in the
allocation of IPO shares reduce institutional allocations. |
| Constraints on allocation discretion result in offer
prices that deviate less from the indicative price range established prior
to bankers' efforts to gauge demand among institutional investors. We
interpret this as indicative of diminished information production.
|
| Initial returns, which reflect a significant indirect
cost of going public, are directly related to this measure of information
production and inversely related to the fraction of shares allocated to
institutional investors. |
