Abstract

http://ssrn.com/abstract=1785342
 
 

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Initial Public Offering Allocations, Price Support, and Secondary Investors


Sturla Lyngnes Fjesme


University of Melbourne - Department of Finance; Financial Research Network (FIRN)

March 1, 2015

AFA 2012 Chicago Meetings Paper

Abstract:     
Tying Initial Public Offering (IPO) allocations to after-listing purchases of other IPO shares, as a form of price support, has generated much theoretical interest and media attention. Price support is price manipulation and can reduce secondary investor return. Obtaining data to investigate price support has in the past proven to be difficult. We document that price support is harming secondary investors using new data from the Oslo Stock Exchange (OSE). We also show that investors who engage in price support are allocated more future oversubscribed allocations and that secondary investors stay away from the market in the future when they lose money.

Number of Pages in PDF File: 49

Keywords: IPO allocations; Laddering; Price stabilization; Price support; Equity offerings

JEL Classification: G24; G28


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Date posted: March 16, 2011 ; Last revised: March 5, 2015

Suggested Citation

Fjesme, Sturla Lyngnes, Initial Public Offering Allocations, Price Support, and Secondary Investors (March 1, 2015). AFA 2012 Chicago Meetings Paper. Available at SSRN: http://ssrn.com/abstract=1785342 or http://dx.doi.org/10.2139/ssrn.1785342

Contact Information

Sturla Lyngnes Fjesme (Contact Author)
University of Melbourne - Department of Finance ( email )
Faculty of Economics and Commerce
Parkville, Victoria 3010 3010
Australia
Financial Research Network (FIRN)
C/- University of Queensland Business School
St Lucia, 4071 Brisbane
Queensland
Australia
HOME PAGE: http://www.firn.org.au

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