Title: Investment Banks as Information Providers in IPOs
Abstract:Financial intermediaries are known to have access to privileged information on …rm value, potentially providing important services by revealing it to uninformed investors. An important issue that aris...Financial intermediaries are known to have access to privileged information on …rm value, potentially providing important services by revealing it to uninformed investors. An important issue that arises is whether Investment Banks have an incentive to distort prices by communicating biased information on the …rms they are underwriting in IPOs. Reputation acquisition may mitigate this problem as intermediaries may lose credibility by incorrectly forecasting the pro…tability of …rms. We argue that the introduction of reputation may not su¢ ce to eliminate all scope for misreporting, allowing less talented intermediaries to pro…t from not revealing their private information to the market.Read More
Publication Year: 2006
Publication Date: 2006-01-01
Language: en
Type: article
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