IPO Underpricing, Trading Volume, and Investor Interest
41 Pages Posted: 31 Aug 1998
Date Written: August 10, 1998
The level of "investor interest" in an IPO prior to its issue influences its offer price, its initial return and its initial trading volume. After issue, this interest level impacts the stock's long-term trading volume, leading to a positive relationship between an IPO's initial return and its trading volume for more than three years after issuance. Using newspaper references as a proxy for the level of interest in a firm, I find that investor interest is positively related to initial return, initial trading volume and long-term trading volume.
JEL Classification: G10, G14
Suggested Citation: Suggested Citation