Social Network, Information Transfer and IPO Underwriting
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| Title | Social Network, Information Transfer and IPO Underwriting
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| Author | Huang Jun,Chen Xinyuan and Yan Endian |
| Organization | Shanghai University of Finance and Economics |
| Email | huangjun@mail.shufe.edu.cn；xychen@mail.shufe.edu.cn；yanpeihui112233@163.com |
| Key Words | Social network, Information transfer, Raising capital, Underwriting fees |
| Abstract | Based on the institutional background of China transitional economy, this paper takes IPO underwriting as the example and examines the impact of social network on the information transfer in the capital market. We find that, if institutional investors build close relationship with underwriters, the accounting performance of invested firms will be better, and the stock returns will be higher in the post-IPO period. On the other hand, from the perspective of underwriters, if closely related institutional investors participate in the IPO, the raising capital of IPO firms will be more and the underwriting fees will be higher. Our analysis confirms that the good relationship between underwriters and institutional investors promotes the information transfer during firms’ IPO. Therefore institutional investors invest in high-quality companies and obtain good returns on investment. Meanwhile, underwriters also benefit from the relationship and receive more underwriting fees through the successful issuance of IPO. The reciprocal transaction contributes to the long-term relationship of social network. |
| Serial Number | WP800 |
| Time | 2015-01-13 |
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