Speaking to members of the Westchester County Association in Tarrytown this morning, New York State Comptroller Thomas DiNapoli said, “For too many years, New York State has treated debt as a surrogate for wealth, using it to buy things we want, rather than things we need.” New York is spending more money than it is taking in, DiNapoli told his listeners, adding that “faced with a budget deadline, and demands from constituencies, we make compromises, we get the budget done, but don’t deal with structural imbalances.” The New York budget crisis is not as severe as New Jersey’s Di Napoli told a questioner, but its budget practices are not as good as New York City’s, where Mayor Michael Bloomberg used recent good years as an opportunity to pay down old debt and build reserves.
Who Profits From IPO Underpricing?
Research has shown that Initial Public Offerings (IPO’s) are underpriced by an average of 15%. This “Knowledge at Wharton” article by Professor Robert E. Hoskisson suggests that “it is in the interest of investment banks to underprice an IPO because it nurtures ties to institutional investors, who are often repeat customers of the banks and who benefit directly from the underpricing.” So-called “inside directors” (i.e., company managers who also sit on the board) need to take a stand on behalf of shareholders to minimize IPO underpricing, according to Hoskisson, and his study co-authors, Jonathan D. Arthurs of Washington State University, Lowell W. Busenitz of the University of Oklahoma, and Richard A. Johnson of the University of Missouri.
Tags: IPO underpricing, Robert Hoskisson