Raising Capital with Uncertainty: Overpricing Initial Public Offering for Science-Based Firms with Multiple Ties to the Food and Drug Administration

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Title: Raising Capital with Uncertainty: Overpricing Initial Public Offering for Science-Based Firms with Multiple Ties to the Food and Drug Administration
Author: Chok, Jay I.
Abstract: I study the effect of indirect ties between the firm's scientific advisory board members and the Food and Drug Administration advisory committees on underwriter prestige, underwriting fee, underpricing and the initial offering price range for firms pursuing highly uncertain opportunities. Prestigious underwriters compete to underwrite securities offered by firms connected to the regulator. This result in overpricing even though the underwriter seeks to enforce underpricing. The findings contribute to the Coase-Knight debate about the role of uncertainty for firm boundaries.
Description: Atlanta Conference on Science and Innovation Policy 2009 This presentation was part of the session : Organizations of Science and Innovation This material is presented to ensure timely dissemination of scholarly and technical work. Copyright and all rights therein are retained by authors or by other copyright holders. All persons copying this information are expected to adhere to the terms and constraints invoked by each author's copyright. In most cases, these works may not be reposted without the explicit permission of the copyright holder. ©2009 IEEE. Personal use of this material is permitted. However, permission to reprint/republish this material for advertising or promotional purposes or for creating new collective works for resale or redistribution to servers or lists, or to reuse any copyrighted component of this work in other works must be obtained from the IEEE.
Type: Proceedings
URI: http://hdl.handle.net/1853/32397
Date: 2009-10-02
Contributor: University of Southern California. Dept. of Management and Organization
Relation: ACSIP09. Organizations of Science and Innovation
Publisher: Georgia Institute of Technology
Subject: Underwriters
Investment banking
Entrepreneurs

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