After the Deal: Underwriters and IPO Trading
August 2001
Speaker:
This work examines the continuing role of the underwriter once an equity offering is complete. Underwriters provide a whole range of services to firms going IPO before, on and after the IPO date. For these services the underwriter charges a fee of seven percent of the deal. One often cited reason for this high price is to subsidise losses from trading after the IPO. We show that this is not the case: underwriters generate extra profits from trading, not losses. Also, IPOs are not unique, as underwriters act in a similar fashion after follow-on equity offerings.
Panelists:
- Mark Dorney, ABN Amro Rothschild
- Jeremy Huelsman, NM Rothschild & Sons Ltd
Resources:
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