Investment Banks' Entry into New IPO Markets and IPO Underpricing
研究了投资银行在香港证券交易所为中国企业承销IPO时，前期IPO抑价程度越低，后续市场份额越大的现象，表明低抑价有助于银行积累专业经验并扩大市场。
We examine the relationship between investment banks' initial public offering (IPO) market shares and their prior IPO underpricing in the new IPO market for China-based companies on the Hong Kong Stock Exchange. To gain expertise in Chinese business practices, investment banks have the incentive to obtain business in this new IPO market by providing high offer prices to the issuer, leading to less underpricing and less money on the table. We hypothesize and find that the less an investment bank underprices China-based company IPOs, the greater its subsequent market share of China-based company IPOs in the Hong Kong Stock Exchange. Furthermore, this relationship is driven by a bank's initial China-based company IPO deals. These results suggest that in new IPO markets, investment banks' initial market shares, obtained through lower underpricing, help them grow their market shares in later periods, possibly through the expertise gained in the initial business. This paper was accepted by Mary Barth, accounting.