Tuesday, June 14, 2011

IPO Fees

In class last night we talked a little about IPOs and I mentioned that in the US IPO fees tend to run around 7%.   This finding was originally documented by Hsuan Chi Chen and Jay Ritter in their 2000 paper "The 7% solution".  A new paper shows that the fees charged in Europe are generally lower than in the US and concludes that the 7% fee in the US is consistent with models of implicit collusion.

Felix Salmon has an excellent summary.