Offering prospectuses, competitive strategies, and the pricing of initial public offering

SMC Author

Gregory B. Merrill

Status

Faculty

School

School of Economics and Business Administration

Department

Accounting

Document Type

Article

Publication Date

2003

Publication / Conference / Sponsorship

The Journal of Private Equity

Description/Abstract

We explore the relationship between the strategic information in an IPO prospectus and the firm's post-IPO pricing. Based upon a content analysis of 39 business to consumer (B2C) and 25 business to business (B2B) “dot.com” initial public offerings, several conclusions were reached. First, e-commerce firms showed dramatic short‐term underpricing and long-term underperformance. Second, we found strong support that the strategic information contained in the firm's prospectus affects post-IPO pricing, and is incorporated in both the initial day and long-term market-adjusted stock prices. And third, we found that the reputation of the firm's underwriter had little correlation with a firm's post-IPO pricing success.

Scholarly

yes

Peer Reviewed

1

DOI

10.3905/jpe.2003.320054

Volume

6

Issue

4

First Page

31

Last Page

37

Disciplines

Accounting

Original Citation

Merrill, G. B., Galbraith, C.S., De Noble, A., & Stiles, C. (2003). Offering prospectuses, competitive strategies, and the pricing of initial public offering. The Journal of Private Equity, 6 (4), 31-37.

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