Download or read book How Stock Flippers Affect IPO Pricing and Stabilization written by Raymond P.H. Fishe and published by . This book was released on 2002 with total page 40 pages. Available in PDF, EPUB and Kindle. Book excerpt: Stock flippers pose a problem for underwriters of initial public offerings (IPOs). They subscribe to the issue, but immediately re-sell their shares, so they create an artificial demand that overstates the true demand in the market. We model how underwriters set the offer price to maximize profits in this environment. Given the underwriter's expectation of flipping activity, we find that the choice of an offer price defines whether the issue is a cold, weak, or hot IPO. A cold IPO is under subscribed; a weak IPO is over-subscribed, but flippers cause the after-market price to decrease; and a hot IPO is over-subscribed but after-market price increases. We show that flippers have the greatest effect on weak IPOs, and provide an explanation for underwriter price support activities. In contrast to existing models of price support, we show that underwriters profit from after-market purchases, particularly if the issue includes an over-allotment option. The over-allotment option causes the underwriter to choose a lower offer price, which may lead to underpricing. We also show that price support combined with the over-allotment option provides a put option to the underwriter, not the market. These results are found to be consistent with recent empirical research on IPOs and price stabilization by underwriters.

Download or read book Do Underwriters Encourage Stock Flipping A New Explanation for the Underpricing of Ipos written by Raymond P.H. Fishe and published by . This book was released on 2000 with total page 52 pages. Available in PDF, EPUB and Kindle. Book excerpt: Disagreement persists about why IPOs are underpriced on average. In part because the more popular theories?based on asymmetric information, signaling, cascades, or investor feedback?are difficult to test, we do not know how much underpricing they can explain. We develop an alternative theory that provides a simple and testable explanation for underpricing. This theory is based on the need for liquidity in the after-market. The issuer gains little if the IPO is placed successfully, but there is no trading afterwards. We show that liquidity needs give rise to an offer price and allocation that encourages some flipping of the IPO. By placing shares with flippers and rationing demand to other investors, flippers have buyers waiting for their shares, which creates after-market trading. The underwriter accomplishes this by underpricing the issue to attract low-valuation investors, who flip shares to higher-valuation investors that are rationed. The underwriter gains trading profits from this arrangement by acting as the primary market maker in the IPO. We test this theory using proprietary data on stock flipping and find significant support for this explanation of underpricing.

Download or read book Pricing and Performance of Initial Public Offerings in the United States written by Arvin Ghosh and published by Routledge. This book was released on 2017-07-05 with total page 156 pages. Available in PDF, EPUB and Kindle. Book excerpt: In this timely volume on newly emerging financial mar- kets and investment strategies, Arvin Ghosh explores the intriguing topic of initial public offerings (IPOs) of securities, among the most significant phenomena in the United States stock markets in recent years. Before the 2000-2001 market turndown, hardly a week went by when more than a few companies did not become public, either in the organized stock exchange or in the Over the Counter (OTC) market. In the often over-burdened, technology-heavy Nasdaq market, the role of IPOs was crucial for the market's new vigor and growth. Internet stocks were able to find a mode to supply key momentum to the market. In the so-called "New Economy" of the 1990s, it was the seductively accessible IPO that ushered in the world's information technology revolution.Ghosh sets out to examine the pricing and financial performance of IPOs in the United States during the period 1990-2001. In the opening chapter he discusses the rise and fall of IPOs in the preceding decade. Chapter 2 further delineates the IPO process from the start of the prospectus to the end of the "quiet period" and aftermarket stabilization. In chapter 3 Ghosh analyzes the mispricing and deliberately deceptive underpricing, or "flipping," of Internet IPOs. Chapter 4 delves deeper into the pricing and operating efficiency of Nasdaq IPOs. Chapter 5 analyzes the pricing and long-run performance of IPOs both in the New York Stock Exchange and in the Nasdaq markets. In chapters 6 and 7 the author deals with the pricing and performance of the venture-blocked and nonventure-backed IPOs in general and Internet IPOs in particular. In chapter 8 he analyzes the role of underwriters as market makers. In chapter 9 Ghosh discusses the accuracy of analysts' earnings forecasts. In the concluding chapter, he summarizes the principal findings of the study and the recent revival of the IPO market and its place in capital formation as well as the latest developments in t

Download or read book The Phenomenon of IPO Underpricing in the European and U S Stock Markets written by Oliver Reiche and published by Anchor Academic Publishing (aap_verlag). This book was released on 2014-06-23 with total page 105 pages. Available in PDF, EPUB and Kindle. Book excerpt: The Initial Public Offering (IPO) marks one of the most important events of a company. Basically, the aim is to generate maximum proceeds by selling the company’s shares to investors. However, the shares that are sold seem to be underpriced as the price significantly soars on the first trading day. Since the very first detection of this phenomenon in the United States in 1969, several subsequent studies have documented the existence of worldwide IPO underpricing. This study focuses on IPO Underpricing in the European and United States Stock Markets by outlining and discussing the following essential issues: What is underpricing in the context of the IPO? Which motivations are there and how do they impact? Is there IPO underpricing in the markets of Europe and the United States of America?

Download or read book The IPO Decision written by Jason Draho and published by Edward Elgar Publishing. This book was released on 2004-01-01 with total page 400 pages. Available in PDF, EPUB and Kindle. Book excerpt: Annotation Initial public offerings (IPOs) garnered unprecedented positive attention in the 1990s for their spectacular returns and central role in entrepreneurial activity. Subsequent revelations of unscrupulous IPO allocation and promotion practices cast a less fa.

Download or read book IPOs and Equity Offerings written by Ross Geddes and published by Elsevier. This book was released on 2003-06-06 with total page 273 pages. Available in PDF, EPUB and Kindle. Book excerpt: An initial public offering (IPO) is one of the most significant events in corporate life. It follows months, even years of preparation. During the boom years of the late 1990s bull market, IPOs of growth companies captured the imagination and pocketbooks of investors like never before. This book goes behind the scenes to examine the process of an offering from the decision to go public to the procedures of a subsequent equity offering. The book is written from the perspective of an experienced investment banker describing the hows and whys of IPOs and subsequent equity issues. Each aspect of an IPO is illustrated with plenty of international examples pitched alongside relevant academic research to offer a combination of theoretical rigour and practical application. Topics covered are: - the decision to go public- legal and regulatory aspects of an offering; marketing and research- valuation and pricing- allocations of shares to investors - examination of fees and commissions * Global perpective: UK, European and US practices, regulations and examples, and case studies* First hand experience written by an IPO trader with academic rigour* Includes the changes in the market that resulted from 1998-2000 equity boom

Download or read book The Irrational and Rational Sides of IPO Flippers written by Maher Kooli and published by . This book was released on 2018 with total page 42 pages. Available in PDF, EPUB and Kindle. Book excerpt: Initial public offering (IPO) flippers are investors who are initially allocated shares at the offer price and immediately resell them. Using a large sample of 2003 IPOs in China from January 1995 to December 2012, we find that on average, flipping accounts for 65.92% of total negotiable shares. We also note that investors flip a greater percentage of their allocation when the IPO is hot and extra hot rather than cold, which confirms the existence of disposition effects. We also examine the impact of the first-day flipping activity on subsequent IPO performance. Using different performance measures, we confirm the negative relationship between flipping activity and IPO aftermarket performance. Specifically, we find that a 10% increase in flipping activity lowers the three-year IPO aftermarket annual performance by 3.6%. Our results are in line with the divergence of opinion hypothesis and asymmetric information.

Download or read book Risk Reputation and the Price Support of IPOs written by Katharina Lewellen and published by . This book was released on 2003 with total page 80 pages. Available in PDF, EPUB and Kindle. Book excerpt: Immediately following public offerings, underwriters often repurchase shares of poorly performing IPOs in an apparent attempt to stabilize the price. Using proprietary Nasdaq data for a large sample of IPOs, I study the price effects and cross-sectional determinants of price support. Some of the key findings are: (1) Price stabilization is substantial, inducing significant price rigidity at and below the offer price. Stabilization appears, at least in the short run, to raise the equilibrium stock price. (2) Many studies suggest that stabilization helps to mitigate information asymmetry problems in the IPO market. I find no evidence that stocks with larger ex-ante information asymmetries are stabilized more strongly. (3) The characteristics of the lead underwriter emerge as the strongest determinants of price support. Larger and more reputable investment banks stabilize more, perhaps to protect their reputations with investors. But there are substantial differences in price support even among the largest underwriters (after controlling for IPO characteristics and underwriter size). (4) Investment banks with retail brokerage operations stabilize much more than other large investment banks. This puzzling result seems inconsistent with the common view that stabilization benefits primarily institutional investors, and I outline and examine several alternative explanations. Keywords: IPOs, price support, stabilization, investment banks, reputation.

Download or read book Stabilization Syndication and Pricing of Ipos written by Bhagwan Chowdhry and published by . This book was released on 1998 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: We argue that in the after-market trading of an IPO, the underwriting syndicate, by standing ready to buy back shares at the offer price (quot;price stabilizationquot;), compensates uninformed investors ex post for the adverse selection cost they face in bidding for IPOs. This dominates ex ante compensation by underpricing. The reason is thatstabilization exploits ex post information about investor demand whereas underpricing must be based on ex ante information. However, liquidity and syndication costs constrain the use of stabilization which, in equilibrium, generates some underpricing as well. We develop a model that formalizes this intuition and generates several empirical implications.

Download or read book Do Firms Get What They Pay For A Second Thought on Over Allotment Option in IPOs written by Emanuele Bajo and published by . This book was released on 2017 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: The over-allotment option usually complements an IPO to meet any excess demand and provides underwriters with an incentive to stabilize stock prices in the aftermarket. This clause represents an additional source of compensation to the investment bank, in exchange of some uncertain positive outcomes to the issuing firm. In this paper we provide evidence of the effects of the over-allotment option on underwriting fees, IPO underpricing, and price stabilization, and we document that, contrary to our expectations, this clause does not reduce the underwriting fees and the IPO underpricing, and it does not increase the aftermarket stabilization.

Download or read book The Development of Secondary Market Liquidity for Nyse Listed Ipos written by Shane A. Corwin and published by . This book was released on 2004 with total page 45 pages. Available in PDF, EPUB and Kindle. Book excerpt: For NYSE-listed IPOs, limit order submissions and depth relative to volume are unusually low on the first trading day. Initial buy-side liquidity is higher for IPOs with high quality underwriters, large syndicates, low insider sales, and high pre-market demand, while sell-side liquidity is higher for IPOs that represent a large fraction of outstanding shares and have low pre-market demand. Our results suggest that uncertainty and offer design affect initial liquidity, though order flow stabilizes quickly. We also find that submission strategies are influenced by expected underwriter stabilization and pre-opening order flow contains information about both initial prices and subsequent returns.

Download or read book Enterprise Applications Markets and Services in the Finance Industry written by Stefan Feuerriegel and published by Springer. This book was released on 2017-01-19 with total page 134 pages. Available in PDF, EPUB and Kindle. Book excerpt: This book constitutes revised selected papers from the 8th International Workshop on Enterprise Applications, Markets and Services in the Finance Industry, FinanceCom 2016, held in Frankfurt, Germany, in December 2016. The 2016 workshop especially focused on “The Analytics Revolution in Finance” and brought together leading academics from a broad range of disciplines, including computer science, business studies, media technology and behavioral science, to discuss recent advances in their respective fields. The 9 papers presented in this volume were carefully reviewed and selected from 13 submissions.

Download or read book SEC Docket written by United States. Securities and Exchange Commission and published by . This book was released on 1994 with total page 874 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book IBSS Economics 2002 Vol 51 written by Compiled by the British Library of Political and Economic Science and published by Routledge. This book was released on 2013-05-13 with total page 675 pages. Available in PDF, EPUB and Kindle. Book excerpt: First published in 1952, the International Bibliography of the Social Sciences (anthropology, economics, political science, and sociology) is well established as a major bibliographic reference for students, researchers and librarians in the social sciences worldwide. Key features * Authority: Rigorous standards are applied to make the IBSS the most authoritative selective bibliography ever produced. Articles and books are selected on merit by some of the world's most expert librarians and academics. *Breadth: today the IBSS covers over 2000 journals - more than any other comparable resource. The latest monograph publications are also included. *International Coverage: the IBSS reviews scholarship published in over 30 languages, including publications from Eastern Europe and the developing world. *User friendly organization: all non-English titles are word sections. Extensive author, subject and place name indexes are provided in both English and French. Place your standing order now for the 2003 volumes of the the IBSS Anthropology: 2002 Vol.48 December 2003: 234x156: Hb: 0-415-32634-6: £195.00 Economics: 2002 Vol.51 December 2003: 234x156: Hb: 0-415-32635-4: £195.00 Political Science: 2002 Vol.51 December 2003: 234x156: Hb: 0-415-32636-2: £195.00 Sociology: 2002 Vol.52 December 2003: 234x156: Hb: 0-415-32637-0: £195.00

Download or read book International Bibliography of Economics written by Compiled by the British Library of Political and Economic Science and published by Psychology Press. This book was released on 2003 with total page 676 pages. Available in PDF, EPUB and Kindle. Book excerpt: IBSS is the essential tool for librarians, university departments, research institutions and any public or private institution whose work requires access to up-to-date and comprehensive knowledge of the social sciences.

Download or read book Federal Securities Law Reporter written by and published by . This book was released on 1941 with total page 2494 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Financing Entrepreneurship written by Philip E. Auerswald and published by Edward Elgar Publishing. This book was released on 2008 with total page 760 pages. Available in PDF, EPUB and Kindle. Book excerpt: Auerswald and Bozkaya have edited this collection of 24 papers about entrepreneurial finance, and the role the government takes in financing and motivating these concerns. These papers emphasize how entrepreneurs have taken advantage of a globalized economy to achieve unprecedented and accelerated success. Topics include the role of private equity and debt markets, entrepreneurial survival tactics and the relationship between entrepreneurs and bureaucrats. Written for business students and modern entrepreneurs, this large reference volume also discusses the debate between self-financing vs. the use of lending institutions.