IPO Underwriting and Subsequent Lending
Journal
Journal of Banking and Finance
Journal Issue
37
Pages
5208-5219
Date Issued
2013
Author(s)
Abstract
This study investigates the relation between IPO underwriting and subsequent lending. We find that when a bank underwrites a firm's IPO, the bank is more likely to provide the issuer with future loans at a lower cost, compared to banks without an IPO underwriting relationship. The evidence also suggests that the underwriting banks share information surplus with the IPO firms in the post-IPO loans, supporting the cost-saving hypothesis. Overall, the evidence for the relation between prior IPO underwriting and subsequent lending supports the notion that firms can derive value from investment bank relationships. © 2013 Elsevier B.V.
SDGs
Type
journal article