Work

Nepotism in IPOs: Consequences for Issuers and Investors

Year: 2025

Type: article

Abstract: IPO underwriters have an incentive to underprice an IPO when they allocate shares to their affiliated funds. We label this conflict of interest “supernepotism” and we analyze its effect on IPO pricing. Using a regression discontinuity design (RDD) on a novel hand-collected data set, we find that higher allocations to underwriter-affiliated funds cause higher IPO underpricing. Our evidence suggests that supernepotism has monetary costs for issuers.

Source: Journal of Financial and Quantitative Analysis

DOI: 10.1017/s002210902400053x

Authors: François Degeorge, Giuseppe Pratobevera

Institutions: Swiss Finance Institute, Università della Svizzera italiana, University of Bristol

Language: English

Topic: Corporate Finance and Governance

Subfield: Accounting

Field: Business, Management and Accounting

Domain: Social Sciences

Open Access status: hybrid

Estimated APC paid: $3,550

Funders: National Science Foundation, Schweizerischer Nationalfonds zur Förderung der Wissenschaftlichen Forschung