The Seven Percent Solution? An International Perspective on Underwriting Spreads

摘要: Non-US firms frequently pay a substantial premium to have US bank lead their initial public offering of equity, even when the issuing firm is not seeking listing on exchange. We provide evidence that this decision reflects an expectation banks deliver higher quality bundle underwriting services. Specifically, non-US includes in its syndicate can expect underpriced by 17.7% less than had it included syndicate. Failure account for endogeneity hire vastly understates magnitude effect. This finding has direct implications claim spreads domestic IPOs are above competitive levels.