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[Seminar] 財金系 10/12 (四) 中午 12:30 邀請 University of Electronic Science and Technology of China 的 Prof. Bo Liu 演講
活動起日:2017-10-12 
發佈日期:2017-09-26 
瀏覽數:264  2017-09-26 更新

本系擬於 10/12 () 邀請 University of Electronic Science and Technology of China Prof. Bo Liu 至本所進行專題演講,相關訊息如下:

 

【演講訊息】

時間: 10/12 () 12:30-14:00

地點: 管理學院一號館八樓財金系會議室

講者: Prof. Bo Liu

講題: A Novel Channel for Rent-seeking in IPOs

 

Abstract:

In sharp contrast to the conventional wisdom that underwriters rely only on share allocation discretion when engaging in rent-seeking behavior in IPO book buildings (Ritter 2011), we find (for the first time in the literature) that in IPO auction without allocation discretion, rent-seeking still occurs. However, the rent-seeking occurs in a novel channel. Specifically, underwriters intentionally leak private information about IPO auction bidding and offer price setting to their main customers, especially valuable mutual fund customers who contribute high brokerage commission fees to underwriters’ affiliated brokerage firms. Using the unique and comprehensive proprietary account-level databases of mutual funds (their contribution of trading commission fees to individual brokerage firms and their IPO auction bidding, allocation records in China), we find these valuable mutual funds submit orders much later in the IPO auction, bid more shares at a more accurate price, bid with less price dispersion, and win higher shares allocation. Underwriters will intentionally set a relatively lower offer price to guarantee their valuable mutual funds be qualified and allocated. The above phenomenon is stronger when the contributed commission fees are greater. These results hold after controlling for potential endogeneity. The rent-seeking behavior is prominent under pro-rata allocation system due to its less uncertainty in shares allocation. To maintain such a rent-seeking process, mutual funds subsequently contribute more trading commission fees to underwriters’ affiliated brokerage firms. The results reveal a novel channel for rent-seeking behavior in IPOs that has not previously been explored in the literature.