(2016) ANDREA MARIA ACCIOLY FONSECA MINARDI; Otero, Marcelo
This paper analyzes how the sponsorship of a private equity firm impacts underpricing of
initial public offerings (IPOs). Underpricing is well documented in financial literature, and
there are evidences that one of its causes is partial adjustment. Partial adjustment occurs
when the underwriter of an issue does not adjust the offering price to the demand observed
during the bookbuilding process, creating positive initial returns. We analyze IPOs issued in
Brazil between 2004 and 2014. We considered the overallotment option in estimating the
underpricing, and our results conclude that partial adjustments and underpricing are higher for
private equity backed IPOs.
