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Ownership structure and underwriter spread: evidence from Japanese IPO firms

Katsushi Suzuki (School of Management, Tokyo University of Science, Kuki City, Japan)

International Journal of Managerial Finance

ISSN: 1743-9132

Article publication date: 4 April 2008

Abstract

Purpose

The purpose of this paper is to empirically examine the relationship between the level of underwriter spread and ownership structure by using data from Japanese IPO firms that are issued during the years 1997‐2002.

Design/methodology/approach

The paper uses regression analysis to determine the effect of the ownership structure (board, bank, affiliated venture capital firms) on underwriter spread and on the post‐issue operating performance of IPO firms.

Findings

This paper finds several results that are in contrast with previous studies. The ownership by board members is positively associated with the level of gross spread but is not associated with post‐issue operating performance. The presence of a commercial bank in the ownership structure of IPO firms decreases the gross spread and increases the post‐issue operating performance of IPO firms. Issuers pay a lower underwriting fee as the ownership share of the lead underwriter‐affiliated VC increases, unlike that of other VCs.

Originality/value

The results of this paper, supporting certification and monitoring hypotheses, contribute to academic research. Most previous studies do not support certification effects.

Keywords

Citation

Suzuki, K. (2008), "Ownership structure and underwriter spread: evidence from Japanese IPO firms", International Journal of Managerial Finance, Vol. 4 No. 2, pp. 96-111. https://doi.org/10.1108/17439130810864005

Publisher

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Emerald Group Publishing Limited

Copyright © 2008, Emerald Group Publishing Limited