Changing underwriting practices on underpricing of U.S. global initial public offerings

We examine the underpricing of U.S. firms that went public globally (Global IPOs) between 1986 and 2003. Our results suggest that, when compared to their peers that went public at home, U.S. issuers did not enjoy an advantage in issue costs from their global offerings. Their offers experienced substantial increases in underpricing, which exceeded that of their peers since the late nineties. We observe that the increased underpricing was accompanied by an overwhelming proportion of Global IPOs being underwritten by prestigious underwriters and backed by venture capitalists. In addition, Global IPOs accounted for an increasing percentage of total issues of U.S. firms in the late nineties. Further findings suggest that Global IPOs may be motivated by expanding investor demand under favorable overseas market conditions and increasing visibility through global placement.