Jin Q. Jeon

Multiple Lead Underwriter IPOs and Firm Visibility

One of the primary goals of a firm going public is to create a greater visibility to investors in general. Using a sample of 809 IPOs from 2001–2010, we empirically examine and find that multiple lead underwriters (MLUs) have greater visibility through our five pre- and post-IPO visibility measures. This also holds after accounting for potential endogeneity. Also, MLU-IPOs do not have more underpricing. Our results suggest that issuers with MLUs can increase the firm’s familiarity to the investment community and expand their investor base, and this increased firm visibility is not a trade-off for a greater level of underpricing.

Effective Post‐Signing Market Check or Window Dressing? The Role of Go‐Shop Provisions in M&A Transactions

This paper examines the use of go-shop provisions in M&A. We find that go-shop deals tend to have higher deal premiums and receive more competing bids while the length of the go-shop period does not affect deal premium and competition. Also, deals are less likely to be completed when a go-shop provision is included and when the go-shop length is longer. However, go-shops have no effect on the completion of high premium deals. We also find that the presence of a go-shop provision leads to a positive market reaction to deal announcements. Overall, our findings support the proposition that go-shops reflect the efforts of target managers to fulfill the Revlon duties in the form of a post-signing market check, which is consistent with stewardship theory.

A new measure for heated negotiation in the IPO syndicate

This paper examines the determinants of the heated negotiation within the syndicate––i) between the lead underwriter and co-managers and ii) among co-managers––and how it affects IPOs. We find that the heated negotiation is associated with less compensation for co-managers. Our results overall suggest that the inferior co-managers’ bargaining position and superior lead underwriter bargaining power, together increasing a chance of an unfair initial profit sharing, lead to the heated negotiation. The heated negotiation between the lead underwriter and co-managers appears to increase the number of co-manager recommendations, and these recommendations increase when they are better compensated and the IPO size is large. We also consider other key underwriter services such as information production, market making, and all-star analyst coverage. However, we find no significant results and these services are commonly not positively related to co-manager compensation, suggesting that the provision of key underwriter services is tightly linked to their corresponding compensation. JEL Classification: G24