Relation between underwriting spread and underpricing in initial public offerings

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School of Business | Bachelor's thesis
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Date

2023

Major/Subject

Mcode

Degree programme

Rahoitus

Language

en

Pages

20 + 2

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Abstract

In this paper, I examine the relationship between underwriting spread and underpricing in initial public offerings in the Asia-Pacific market during the 21st century. I cross-sectionally regress underpricing against underwriting spreads while controlling variables that prior research suggests to influence underpricing or spreads. My findings indicate a positive and significant relationship between underwriting spread and underpricing, suggesting a complementarity between these costs. Additionally, my results indicate that less profitable issuers are more underpriced, and charged higher spreads compared to more profitable issuers.

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Thesis advisor

Kokkonen, Joni

Keywords

initial public offering, underpricing, underwriting spread, 21st century

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