The Marketing and Sale of Initial Public Offerings (IPOs)through Internet-Based Investment Bankers

摘要

Internet-based investment bankers provide companiesrnwith another sales channel for selling stock through initialrnpublic offerings (IPOs). The research issue that arisesrnfrom this new process is to identify the differencesrnbetween the traditional process and the new onlinernprocess. Based on evidence from several investmentrnbanking firms that provide an electronic market for IPOs,rnwe evaluate the new IPO sales process using transactionrncost economics analysis. We find that the new onlinernprocess typically results in benefits to the seller such asrnlower investment banker commissions and higher receiptsrnfrom the sale, but also involves a higher level of riskrnwhen compared with the process that uses traditionalrninvestment bankers. Our overall conclusion is that thernnew process is a benefit to both IPO companies andrninvestors because it provides an alternative online marketrnthat increases the level of competition for investmentrnbankers and improves the overall efficiency of the marketrnfor IPOs.