Stabilization Activities by Underwriters after Initial Public Offerings

Journal of Finance - Tập 55 Số 3 - Trang 1075-1103 - 2000
Reena Aggarwal1
1McDonough School of Business, Georgetown University

Tóm tắt

Prior research has assumed that underwriters post a stabilizing bid in the aftermarket. We find instead that aftermarket activities are less transparent and include stimulating demand through short covering and restricting supply by penalizing the flipping of shares. In more than half of IPOs, a short position of an average 10.75 percent of shares offered is covered in 22 transactions over 16.6 days in the aftermarket, resulting in a loss of 3.61 percent of underwriting fees. Underwriters manage price support activities by using a combination of aftermarket short covering, penalty bids, and the selective use of the overallotment option.

Từ khóa


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Thông tin
Thông tin xuất bản

Journal of Finance

Tập 55 Số 3

1075-1103

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