TY  - JOUR
AU  - Aggarwal,Reena
AU  - Prabhala,Nagpurnanand R.
AU  - Puri,Manju
TI  - Institutional Allocation In Initial Public Offerings: Empirical Evidence
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 9070
PY  - 2002
Y2  - July 2002
UR  - http://www.nber.org/papers/w9070
L1  - http://www.nber.org/papers/w9070.pdf
N1  - Author contact info:
Reena Aggarwal
Georgetown University
Finance Group
McDonough School of Business
529 Hariri
Washington, DC  20057
Tel: 202-687-3784
E-Mail: aggarwal@georgetown.edu

Nagpurnanand R. Prabhala
R.H. Smith School of Business
University of Maryland
4427 Van Munching Hall
College Park, MD 20742
Tel: 301-405-2165
E-Mail: prabhala@umd.edu

Manju Puri
Fuqua School of Business
Duke University
1 Towerview Drive, Box 90120
Durham, NC 27708-0120
Tel: 919/660-7657
Fax: 919/681-6246
E-Mail: mpuri@duke.edu
AB  - We analyze institutional allocation in initial public offerings (IPOs) using a new dataset of US offerings between 1997 and 1998. We document a positive relationship between institutional allocation and day one IPO returns. This is partly explained by the practice of giving institutions more shares in IPOs with strong pre-market demand, consistent with book-building theories. However, institutional allocation also contains private information about first-day IPO returns not reflected in pre-market demand and other public information. Our evidence supports book-building theories of IPO underpricing, but suggests that institutional allocation in underpriced issues is in excess of that explained by book-building alone.
ER  -