The Certification Role of Large Customers in the New Issues Market

William Curtis Johnson, Jun-Koo Kang, Sangho Yi

Publikation: Wissenschaftliche FachzeitschriftOriginalbeitrag in FachzeitschriftBegutachtung


This paper examines the certification role of large customers and finds that IPO firms that have product market relationships with large customers experience higher valuation and better long‐term performance compared to IPOs without such relationships. This higher valuation is more pronounced when product market relationships are able to alleviate IPO uncertainties, when the businesses of large customers and their IPO suppliers are closely related in downstream markets, and when large customers have stronger certifying abilities. Finally, we find that large customers realize significant positive abnormal returns around their suppliers’ preliminary prospectus filing dates, suggesting that some of the benefits from product market relationships accrue to large customers.
Seiten (von - bis)1425 - 1474
FachzeitschriftFinancial Management
PublikationsstatusVeröffentlicht - 2010

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