دانلود رایگان مقاله تخصیص بیمه گر با و بدون قدرت اختیاری

Abstract

This 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.

6. Conclusion

This study investigates the impact of the mandatory clawback provision on underwriters' IPO share allocation and the allocation-adjusted returns for various investor groups in Hong Kong. Consistent with the winner's curse, we show that the ability of investors to earn positive initial returns is minimal, due to greater allocations of overpriced IPOs and smaller allocations of underpriced issues. Interestingly, we find that the mandatory clawback provision has favored retail investors and enhanced their chances of receiving more of the underpriced IPOs and less of the overpriced ones. Furthermore, we show that the pre- (post-) mandatory-clawback allocation-adjusted returns earned by different investor groups are significantly lower than (not significantly different from) the risk-free rate. Finally, we show that the mandatory clawback provision has significantly improved share allocations to small investors. Our results provide support for the view that the mandatory clawback provision has reduced the winner's curse and brought about an element of fairness among investors. The results also show that the Hong Kong regulatory authority should resist the deregulation pressure to scrap the clawback provision, and other countries should consider introducing similar provisions to maintain fairness in IPO share allocations.