The Marketing of Closed-End Fund IPOs: Evidence from Transactions Data

Journal of Financial Intermediation, Vol. 5, pp. 127-159, 1996

Posted: 14 Feb 2008

See all articles by Kathleen Weiss Hanley

Kathleen Weiss Hanley

Lehigh University - College of Business & Economics

Charles M.C. Lee

Stanford University - Graduate School of Business

Paul J. Sequin

affiliation not provided to SSRN

Abstract

We examine aftermarket transactions for closed-end fund IPOs and document large sell-to-buy imbalances ("flipping"), extensive price stabilization, and sharp subsequent price drops. The timing of the price drop is related to both the amount of initial flipping, and use of the over-allotment options. The extent of the flipping activity is related to the composition of the syndicate. Moreover, aftermarket buys (sells) are mainly small (large) trades. These findings suggest that lead underwriters price stabilize and manage the supply of shares in the aftermarket, and that closed-end fund IPOs are marketed to a poorly informed public.

JEL Classification: G19

Suggested Citation

Hanley, Kathleen Weiss and Lee, Charles M.C. and Sequin, Paul J., The Marketing of Closed-End Fund IPOs: Evidence from Transactions Data. Journal of Financial Intermediation, Vol. 5, pp. 127-159, 1996. Available at SSRN: https://ssrn.com/abstract=1092219

Kathleen Weiss Hanley

Lehigh University - College of Business & Economics ( email )

Bethlehem, PA 18015
United States

Charles M.C. Lee

Stanford University - Graduate School of Business ( email )

Stanford Graduate School of Business
655 Knight Way
Stanford, CA 94305-5015
United States
650-721-1295 (Phone)

Paul J. Sequin (Contact Author)

affiliation not provided to SSRN

No Address Available

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