Financial Conglomeration, IPO Underwriting, and Allocation in Japan

We examine whether financial conglomeration enhances efficiency of capital allocation or conflicts of interest, focusing on pricing and allocation of IPO stocks in Japan. Regarding underwriting of IPO stocks, our results are consistent with the bank certification hypothesis. As for IPO allocation, the main bank underwriters allocate little to mutual funds, but when they do, they allocate the more underpriced IPOs to unaffiliated mutual funds. We also find some locally consistent evidence supporting the nepotism hypothesis in aftermarket returns of IPO shares. Bank-involved allocation to mutual funds is, however, unrelated to risk-adjusted return (i.e., real quality) and to bank loan reduction in the aftermarket. Overall, the main banks and underwriters do not co-work to allocate new shares in a way that further certifies IPO quality, prompting institutional investors to hold longer in the aftermarket. This is in sharp contrast to U.S. IPO share allocation practice.

我们研究金融集团化是提高了资本配置效率还是加剧了利益冲突，重点关注日本首次公开发行（IPO）股票的定价和配置。关于IPO股票的承销，我们的结果与银行认证假说相符。至于IPO配置，主承销银行很少将股票分配给共同基金，但当它们这样做时，它们会将定价偏低程度更高的IPO股票分配给无关联的共同基金。我们还发现一些局部一致的证据，支持IPO股票在上市后回报方面的裙带关系假说。然而，银行参与的对共同基金的分配与风险调整后的回报（即实际质量）以及上市后的银行贷款减少无关。总体而言，主银行和承销商并没有共同协作以进一步认证IPO质量的方式分配新股，促使机构投资者在上市后长期持有。这与美国的IPO股票分配做法形成鲜明对比。