Stabilization, syndication, and pricing of IPOs

被引:74
作者
Chowdhry, B
Nanda, V
机构
[1] UNIV MICHIGAN,SCH BUSINESS ADM,ANN ARBOR,MI 48109
[2] UNIV SO CALIF,LOS ANGELES,CA 90089
关键词
D O I
10.2307/2331385
中图分类号
F8 [财政、金融];
学科分类号
0202 ;
摘要
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 (''price stabilization''), 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 that stabilization 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.
引用
收藏
页码:25 / 42
页数:18
相关论文
共 18 条
[1]   THE OPENING PRICE PERFORMANCE OF INITIAL PUBLIC OFFERINGS OF COMMON-STOCK [J].
BARRY, CB ;
JENNINGS, RH .
FINANCIAL MANAGEMENT, 1993, 22 (01) :54-63
[2]   INVESTMENT BANKING, REPUTATION, AND THE UNDERPRICING OF INITIAL PUBLIC OFFERINGS [J].
BEATTY, RP ;
RITTER, JR .
JOURNAL OF FINANCIAL ECONOMICS, 1986, 15 (1-2) :213-232
[3]  
BENVENISTE LM, 1994, PRICE STABILIZATION
[4]  
BENVENISTE LM, 1989, J FINANC ECON, V24, P64
[5]   CAPITAL RAISING, UNDERWRITING AND THE CERTIFICATION HYPOTHESIS [J].
BOOTH, JR ;
SMITH, RL .
JOURNAL OF FINANCIAL ECONOMICS, 1986, 15 (1-2) :261-281
[6]   INITIAL PUBLIC OFFERINGS AND UNDERWRITER REPUTATION [J].
CARTER, R ;
MANASTER, S .
JOURNAL OF FINANCE, 1990, 45 (04) :1045-1067
[7]   PRICE STABILIZATION IN THE MARKET FOR NEW ISSUES [J].
HANLEY, KW ;
KUMAR, AA ;
SEGUIN, PJ .
JOURNAL OF FINANCIAL ECONOMICS, 1993, 34 (02) :177-197
[8]  
HAYES SL, 1983, COMPETITION INVESTME
[9]  
IBBOTSON RR, 1993, NEW CORPORATE FINANC, P253
[10]   A DIRECT TEST OF ROCKS MODEL OF THE PRICING OF UNSEASONED ISSUES [J].
KOH, F ;
WALTER, T .
JOURNAL OF FINANCIAL ECONOMICS, 1989, 23 (02) :251-272