Why don't U.S. issuers demand European fees for IPOs?

We compare fees charged by investment banks for conducting IPOs in the United States and Europe. In recent years, the "7% solution," as documented by Chen and Ritter (2000), has become even more prevalent in the United States, and is now the norm for IPOs raising up to 250 million dollars....

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Main Authors: Abrahamson, M, Jenkinson, T, Jones, H
Format: Journal article
Published: Wiley 2011
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author Abrahamson, M
Jenkinson, T
Jones, H
author_facet Abrahamson, M
Jenkinson, T
Jones, H
author_sort Abrahamson, M
collection OXFORD
description We compare fees charged by investment banks for conducting IPOs in the United States and Europe. In recent years, the "7% solution," as documented by Chen and Ritter (2000), has become even more prevalent in the United States, and is now the norm for IPOs raising up to 250 million dollars. The same banks dominate both markets, but European IPO fees are roughly three percentage points lower, are much more variable, and have been falling. We review explanations for the gap in spreads and find the evidence consistent with strategic pricing. U.S. issuers could have saved over 1 billion dollars a year by paying European fees.
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spelling oxford-uuid:28966c26-3203-4f2c-9da9-6be3e2e06c602022-03-26T12:13:48ZWhy don't U.S. issuers demand European fees for IPOs?Journal articlehttp://purl.org/coar/resource_type/c_dcae04bcuuid:28966c26-3203-4f2c-9da9-6be3e2e06c60Social Sciences Division - DaisyWiley2011Abrahamson, MJenkinson, TJones, HWe compare fees charged by investment banks for conducting IPOs in the United States and Europe. In recent years, the "7% solution," as documented by Chen and Ritter (2000), has become even more prevalent in the United States, and is now the norm for IPOs raising up to 250 million dollars. The same banks dominate both markets, but European IPO fees are roughly three percentage points lower, are much more variable, and have been falling. We review explanations for the gap in spreads and find the evidence consistent with strategic pricing. U.S. issuers could have saved over 1 billion dollars a year by paying European fees.
spellingShingle Abrahamson, M
Jenkinson, T
Jones, H
Why don't U.S. issuers demand European fees for IPOs?
title Why don't U.S. issuers demand European fees for IPOs?
title_full Why don't U.S. issuers demand European fees for IPOs?
title_fullStr Why don't U.S. issuers demand European fees for IPOs?
title_full_unstemmed Why don't U.S. issuers demand European fees for IPOs?
title_short Why don't U.S. issuers demand European fees for IPOs?
title_sort why don t u s issuers demand european fees for ipos
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