Do prestigious underwriters shape IPO pricing? A meta-analytic review

This paper investigates the controversial effect of underwriter reputation on underpricing by applying a meta-analysis methodology. The aim is to verify whether and to what extent the magnitude of this relationship is conditioned by institutional-specific moderators. Companies that go public with the support of prestigious underwriters report a changing effect on underpricing. The relation between underwriter reputation and underpricing was negative in the seventies, while it shifted to be positive in the nineties and two thousands. The positive effect between underwriter reputation and underpricing is higher in common law countries compared to civil law countries. In particular, there was a strong positive effect in the USA starting in the two thousands. This paper also provides a methodological contribution by the application, for the first time in management topic, of the robust variance estimation method to address the issue of within-paper heterogeneity.