When do Investment Banks use IPO Price Support?
| Autor: | Sturla Lyngnes Fjesme |
|---|---|
| Rok vydání: | 2020 |
| Předmět: |
040101 forestry
050208 finance Initial public offerings business.industry Corporate governance 05 social sciences Financial system 04 agricultural and veterinary sciences Norwegian language.human_language Investment banking Central bank Accounting 0502 economics and business Price support language 0401 agriculture forestry and fisheries ComputingMilieux_COMPUTERSANDSOCIETY Stock-trading commissions business General Economics Econometrics and Finance Initial public offering |
| Zdroj: | European Financial Management |
| ISSN: | 1556-5068 |
| DOI: | 10.2139/ssrn.3738449 |
| Popis: | Practitioners, regulators, and the financial media argue that underwriters tie initial public offering (IPO) allocations to investor post-listing buying of the issuer shares in a process labelled price support. Arguably, this excess demand boosts post-listing returns which underwriters trade quid pro quo with investor stock-trading commission payments. In this paper, I investigate unique data from the Oslo Stock Exchange (OSE) including investor stock-trading commissions, IPO allocations, and post-listing trading. I document that investors who provide high returns to underwriters before IPOs benefit from price support through increased returns in IPOs. I conclude that price support is used when investors share boosted returns with underwriters The American–Scandinavian Association, the Center for Corporate Governance Research (CCGR) at BI Norwegian Business School, and the Central Bank of Norway provided financial support. |
| Databáze: | OpenAIRE |
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