Underwriters' allocation with and without discretionary power: Evidence from the Hong Kong IPO market

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dc.contributor.authorMazouz, K.
dc.contributor.authorMohamed, Abdulkadir
dc.contributor.authorSaadouni, B.
dc.contributor.authorYin, S.
dc.date.accessioned2017-03-10T11:21:15Z
dc.date.available2017-03-10T11:21:15Z
dc.date.issued2017-01-03
dc.description.abstractThis study uses a unique and extensive data set from the Hong Kong IPO market to examine the theory of adverse selection under two distinct regulatory regimes in relation to underwriters' discretionary power in IPO share allocation. Consistent with Rock's (1986) theory of adverse selection in the IPO market, we show that, prior to the introduction of the clawback provision; retail (uninformed) investors were allocated more of the overpriced offerings and less of the underpriced issues. However, after the provision is implemented, retail investors have been allocated significantly more of the underpriced offerings and less of the overpriced ones. Overall, we find that allocation-adjusted initial returns for the retail investors are lower (higher) than the risk-free rate pre- (post-) clawback provision. These findings imply that the mandatory clawback provision has enhanced the fairness in IPO share allocations among different investor groups and has reduced the winner's curse in the IPO market.en_UK
dc.identifier.citationMazouz K, Mohamed A, Saadouni B, Yin S, Underwriters' allocation with and without discretionary power: Evidence from the Hong Kong IPO market, International Review of Financial Analysis, Volume 49, January 2017, Pages 128–137.en_UK
dc.identifier.issn1057-5219
dc.identifier.urihttp://dx.doi.org/10.1016/j.irfa.2016.12.006
dc.identifier.urihttp://dspace.lib.cranfield.ac.uk/handle/1826/11595
dc.language.isoenen_UK
dc.publisherElsevieren_UK
dc.rightsAttribution-NonCommercial-NoDerivatives 4.0 International
dc.rights.urihttp://creativecommons.org/licenses/by-nc-nd/4.0/
dc.subjectMandatory clawbacken_UK
dc.subjectAdverse selectionen_UK
dc.subjectAllocation-adjusted returnsen_UK
dc.titleUnderwriters' allocation with and without discretionary power: Evidence from the Hong Kong IPO marketen_UK
dc.typeArticleen_UK

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