Underwriter reputation and underpricing: Evidence from the Japanese IPO market

In this paper we develop a new method for measuring underwriter reputation and apply it to the Japanese IPO market using data from 1998 to 2002. Our findings suggest that the relationship between underwriter reputation and underpricing depends on where the IPO is priced, reflecting the level of demand for the issue. When there is high (low) demand there is a positive (negative) and significant relationship between underwriter reputation and the level of underpricing.