argue that the most effective approach to understanding the aftermarket performance
of IPOs should be based on style analysis.
Theoretical and empirical work supports the view that the quality of the under-
writer employed by the IPO firm to market the issue can be used to distinguish
between high- and low-quality firms. Titman and Trueman (1986) developed a model
which predicts that underwriters specialize by quality of offering. Beatty and Ritter
(1986) provided evidence to support this proposition. Chemmanur and Fulghieri
(1994) argued that investors assess the credibility of underwriters using the quality of
firms they take public. Hence underwriters ...
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