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Do multiple credit ratings reduce money left on the table? Evidence from U.S. IPOs

Goergen, M., Gounopoulos, D. and Koutroumpis, P. ORCID: https://orcid.org/0000-0002-2281-7236 (2021) Do multiple credit ratings reduce money left on the table? Evidence from U.S. IPOs. Journal of Corporate Finance, 67. p. 101898. ISSN 1872-6313

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To link to this item DOI: 10.1016/j.jcorpfin.2021.101898

Abstract/Summary

Using credit ratings as an uncertainty-reducing mechanism, we provide evidence of the beneficial impact of multiple credit ratings on reducing IPO underpricing and filing price revision. We find that the acquisition of multiple ratings in the pre-IPO period mitigates uncertainty more than the acquisition of a single rating. Multi-rated firms also have higher probabilities of survival than those with a single rating, whereas credit rating levels matter only for IPOs with more than one rating. The IPOs that are awarded the first rating on the borderline between investment and non-investment grades are more likely to seek an additional rating.

Item Type:Article
Refereed:Yes
Divisions:No Reading authors. Back catalogue items
Henley Business School > Finance and Accounting
ID Code:124814
Publisher:Elsevier

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