Post-Ipo Flipping and Turnover: Predictive Factors for Long-Run Returns

28 Pages Posted: 17 Nov 2004

See all articles by Boulat A Bash

Boulat A Bash

University of Massachusetts Amherst - Department of Computer Science

Date Written: May 2001

Abstract

I show that, consistent with Krigman, Shaw, and Womack's (1999) findings on flipping activity, one-year IPO returns are predicted by first-day flipping activity. That is, when block flipping is low, returns are high. I extend their flipping methodology to incorporate the information through the end of the quiet period (25 calendar days after the IPO) and show that flipping during this period is even more informative than the first-day signal. In addition, I find that a higher average relative level of turnover to the end of the quiet period (volume as a percent of shares offered) is significant in predicting higher one-year stock returns beginning after the quiet period. Finally, in examining the time series of flipping from 1993 through 1999, I show that Depository Trust Company's (DTC) IPO tracking system which began in 1997 has had a substantial impact on lowering the amount of subsequent flipping.

Keywords: IPOs, flipping, turnover, Depository Trust Company

JEL Classification: G14, G21

Suggested Citation

Bash, Boulat A, Post-Ipo Flipping and Turnover: Predictive Factors for Long-Run Returns (May 2001). Available at SSRN: https://ssrn.com/abstract=620164 or http://dx.doi.org/10.2139/ssrn.620164

Boulat A Bash (Contact Author)

University of Massachusetts Amherst - Department of Computer Science ( email )

Amherst, MA 01002
United States

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