Reciprocity relationships between underwriters and institutional investors in the IPO market.

• Main Authors: DENG, Chaowen, WAN, William, LI, Xuan, YIU, Daphne W.
• Format: text
• Language: English
• Published: Institutional Knowledge at Singapore Management University 2023
• Subjects: Finance and Financial Management; Strategic Management Policy
• Online Access: https://ink.library.smu.edu.sg/lkcsb_research/7461; https://doi.org/10.5465/AMPROC.2023.14715abstract
• Institution: Singapore Management University

This study seeks to extend research on initial public offering (IPO) by examining the intricate relationships between institutional investors and underwriters by viewing the IPO market as a social relational structure. We posit that institutional investors and underwriters maintain reciprocity relationships in the IPO market, and such relationships have a significant impact on underwriters’ share allocations and institutional investors’ investment decisions. Using a reciprocity dynamics perspective, our study further depicts how perceived fairness and indirect reciprocity affect the reciprocity relationships between underwriters and institutional investors. By illuminating their reciprocity relationships, our study furnishes a more in-depth understanding of the processes and mechanisms in the IPO market.