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Title: Three essays on equity issuance and investment banking
Author: Wen, Zhe
ISNI:       0000 0004 7655 5256
Awarding Body: University of Manchester
Current Institution: University of Manchester
Date of Award: 2015
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This thesis presents three empirical essays in the areas of equity issuance and investment banking. In the first essay, I document that an increasing number of initial public offering (IPO) firms have been allowed by their lead underwriters to conduct a seasoned equity offering (SEO) before IPO lockup expiry (pre-expiry SEO). I examine the determinants of pre-expiry SEOs and their impact on issuers' firm value. I find that issuers with stronger post-IPO stock performance and more reputable lead underwriters are more likely to issue pre-expiry SEOs. The three-day average abnormal return around the announcement day is -3.35% for pre-expiry SEOs compared to -1.70% for a control group of post-expiry SEOs. I predict that there would have been a three-day average abnormal return of -5.53% for the post-expiry control group had they conducted pre-expiry SEOs. I also find that pre-expiry SEO issuers tend to have better stock returns around IPO lockup expiry than other firms. Overall, my results suggest that it is 'better-quality' firms that are more likely to conduct pre-expiry SEOs. In the second study, I examine the impact of early IPO lockup release on issuers' decision to switch lead underwriters at their first SEO. With issuers using multiple lead underwriters, I distinguish between a complete switch (all leads are replaced) and a partial switch (at least one lead is retained). I find that none of the issuers that are allowed early release for a pre-expiry SEO completely switch underwriters at the SEO. The relative probability of a complete switch (vs. no switch) is much lower for issuers whose insiders are allowed to sell early in the open market. In the case of a partial switch, issuers tend to retain the more reputable lead underwriters. Overall, I provide strong evidence that granting issuers early IPO lockup release can help investment banks retain underwriting business. In the third essay, I document that the frequency of multiple-bookrunner SEOs increased dramatically from nearly zero in 1997 to more than 60% in 2013. With a sample of 2386 U.S. SEOs from 2001-2013, I examine the impact of multiple bookrunners on SEO offer price discounts and SEO gross spreads. After controlling for other influential factors and endogeneity or self-selection bias, I find that the offer price discount for a multiple-bookrunner SEO is 2.028% lower than that for a single-bookrunner SEO, while their gross spreads are not significantly different from each other. Overall, my results indicate that seasoned equity issuers should hire multiple bookrunners.
Supervisor: Espenlaub, Susanne ; Khurshed, Arif Sponsor: Not available
Qualification Name: Thesis (Ph.D.) Qualification Level: Doctoral
EThOS ID:  DOI: Not available