Do Institutional Investors Play Hide-and-Sell in the IPO Aftermarket?

66 Pages Posted: 4 Jun 2018 Last revised: 23 Feb 2019

See all articles by Tamara Nefedova

Tamara Nefedova

Université Paris-Dauphine

Giuseppe Pratobevera

University of Lugano; Swiss Finance Institute

Date Written: February 14, 2018


We document a robust buy/sell asymmetry in the choice of the broker in the IPO aftermarket: institutional investors are less likely to sell than buy through the lead underwriters. Consistent with investors hiding their sell trades, the asymmetry is the strongest in cold IPOs and it is limited exclusively to the first month after the issue. Contrary to the conventional view, the intention to flip IPO allocations is not an important motive for hiding sell trades from the lead underwriters; institutions that sell shares through non-lead brokers tend to have bought them through the lead underwriters in the IPO aftermarket, consistent with institutions breaking their laddering agreements. We find that hiding sell trades is an effective strategy to circumvent underwriters' monitoring mechanisms: the more institutions hide their sell trades, the less they are penalized in subsequent IPO allocations.

Keywords: IPO allocations, IPO aftermarket trading, laddering, flipping, institutional investors

JEL Classification: G23, G24, G39

Suggested Citation

Nefedova, Tamara and Pratobevera, Giuseppe, Do Institutional Investors Play Hide-and-Sell in the IPO Aftermarket? (February 14, 2018). Available at SSRN: or

Tamara Nefedova (Contact Author)

Université Paris-Dauphine ( email )

Place du Maréchal de Tassigny
Paris, Cedex 16 75775


Giuseppe Pratobevera

University of Lugano ( email )

Via Giuseppe Buffi 13
Lugano, Ticino 6900

Swiss Finance Institute ( email )

c/o University of Geneva
40, Bd du Pont-d'Arve
CH-1211 Geneva 4

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