The Certification Role Of Pre-IPO Banking Relationships: Evidence From IPO Underpricing in Japan

    Research output: Contribution to journalArticle


    We find empirical evidence that pre-initial public offering (IPO) relationships with commercial banks through lending and investment via their venture capital subsidiaries significantly reduce IPO underpricing in Japan. This findings suggest that a pre-IPO banking relationship certifies the low risk of an IPO firm. Given the fact that institutional investors are a minority in the allocation of IPO stocks in Japan, this effect is expected to come mainly from reducing either the investors' winner's curse or the signaling incentive of IPO firms, rather than from the reduction in information rent for institutional investors participating in the book-building process.

    Original languageEnglish
    JournalJapanese Economic Review
    Publication statusAccepted/In press - 2016


    ASJC Scopus subject areas

    • Economics and Econometrics

    Cite this