Short covering and price stabilization of IPOs

Andrea Signori, A. Signori, M. Meoli, S. Vismara

Risultato della ricerca: Contributo in rivistaArticolo in rivista

10 Citazioni (Scopus)

Abstract

Underwriters underprice Initial Public Offerings (IPOs) and often, immediately after, repurchase shares in an attempt to stabilize the price. This ancillary service is not mandatory and can be provided by underwriters in the first month of trading. Using a sample of Italian IPOs, we investigate whether the price stabilization activity is carried out when actually needed. We document that only half of the IPOs that require this service are actually stabilized after going public. The fees charged by underwriters are not informative about the provision of this ancillary activity. Rather, the underwriter's reputation is negatively associated with the stabilization activity. Negative price revisions and negative (or low) underpricing also drive the provision of price stabilization.
Lingua originaleEnglish
pagine (da-a)931-937
Numero di pagine7
RivistaApplied Economics Letters
Volume20
DOI
Stato di pubblicazionePubblicato - 2013

Keywords

  • IPOs
  • gross spread
  • investment banks
  • price stabilization
  • underwriters

Fingerprint

Entra nei temi di ricerca di 'Short covering and price stabilization of IPOs'. Insieme formano una fingerprint unica.

Cita questo