Multiple lead underwriters and IPO visibility - European evidence

In this thesis, I study whether issuers employing multiple lead underwriters (MLUs) experience greater pre-IPO and post-IPO visibility in European context. My sample consists of 573 IPOs. The sample is collected from the Securities Data Corporations (SDC) database. The sample includes IPOs with issue dates ranging from 2001 to 2010. All issuing companies are listed in the EU-15 countries. Company visibility is analyzed using both pre-IPO and post-IPO visibility measures, for which the data is collected from LexisNexis, I/B/E/S and Thomson One databases. Underwriter reputation rankings are from Migliorati & Vismara(2014). The analysis is conducted using OLS and tobit regressions. The findings of my research suggest that employing MLUs affects the IPO visibility. I show that issuers employing MLUs receive on average 22.8-32.6% higher amount of absolute analyst coverage, depending on the method and sample used. Furthermore, employing MLUs increases the fraction of coverage provided by lead underwriter analysts relative to overall coverage by 22.4-47.3%. I also show that this improved visibility does not come with higher first-day return (underpricing). On the contrary, employing MLUs leads to a 0.51 to 0.84 percentage point decrease in underpricing. Moreover, issues with highly ranked underwriters experience significantly (up to 0.82-0.96 percentage points) lower underpricing, compared with others. Contrary to prior research, I find no relation between employing MLUs and pre-IPO media coverage or post-IPO stock turnover