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School of Business | Department of Finance | Finance | 2014
Thesis number: 13638
Withdrawn IPOs returning to market: The role of underwriters
Author: Röynä, Antti-Olavi
Title: Withdrawn IPOs returning to market: The role of underwriters
Year: 2014  Language: eng
Department: Department of Finance
Academic subject: Finance
Index terms: rahoitus; financing; investointipankit; investment banks; listautuminen; listed companies; arvopaperimarkkinat; stock exchange markets; rahoitusmarkkinat; financial markets; pääoma; capital
Pages: 70
Key terms: Investment banking, securities underwriting, initial public offerings

The research objectives are divided into two sections. First objective is to provide an updated analysis of the determinants of withdrawn IPO filings and of those withdrawn filings that later return to the market for a successful offering. In particular, the thesis focuses on the roles of the lead underwriter and joint book-runners. Second, the study utilizes the unique context of withdrawn IPOs that later return to the market for a successful offering to analyse underwriter switching and syndicate structure revisions. Consequently, the thesis contributes to the existing literature by extending the analysis of Dunbar and Foester (2008) and testing the propositions of Corwin and Schultz (2005).


The sample consists of 6,730 successful and 1,950 withdrawn IPO filings that have been filed between 1985 and 2011. The IPO data has been obtained from Thomson Reuters SDC Platinum and it has been supplemented with SEC EDGAR, Federal Reserve Economic Data and the websites of Jay Ritter and Kenneth French. Based on Dunbar and Foester (2008), I use multivariate probit regression analysis to study the determinants of IPO withdrawals and successful returns whereas underwriter switching and syndicate structure revisions are examined with t-test for means and Wilcoxon test for medians. Additionally, I use fixed effects logit regression alongside the probit regression to examine the determinants of IPO withdrawals and successful returns, which is not done by Dunbar and Foester.


The results show that issuers with greater ex-ante certification provided by prestigious lead underwriters and venture capitalists are more likely to later return for a successful IPO. The number or reputation levels of joint book-runners do not significantly affect the probability of successful return. However, when analysing the affect of joint book-runners on the probability of withdrawal, the results show that issuers backed by several reputable joint book-runners and venture capital investors are less likely to withdraw an initial public offering. In terms of underwriter switching, the findings indicate that issuers switching to more reputable underwriters for the successful offering attempt to raise more capital. When taking into account the revisions in syndicate structure, the results show that the number of joint book-runners and overall syndicate size are limited by the choice of prestigious lead underwriter.
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