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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Format: | Journal article |
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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. |
first_indexed | 2024-03-06T20:04:54Z |
format | Journal article |
id | oxford-uuid:28966c26-3203-4f2c-9da9-6be3e2e06c60 |
institution | University of Oxford |
last_indexed | 2024-03-06T20:04:54Z |
publishDate | 2011 |
publisher | Wiley |
record_format | dspace |
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 |
work_keys_str_mv | AT abrahamsonm whydontusissuersdemandeuropeanfeesforipos AT jenkinsont whydontusissuersdemandeuropeanfeesforipos AT jonesh whydontusissuersdemandeuropeanfeesforipos |