Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
960111 | Journal of Financial Economics | 2006 | 25 Pages |
Abstract
I examine the enormous trading volume in the first two days of trading following an initial public offering (IPO) with a sample of Nasdaq IPOs. The composition of trading varies widely with the initial return and not all trading is investor-related. Cold IPOs have a high proportion of interdealer sell trades, whereas hot IPOs have balanced investor buying and selling. Market makers hold zero inventory throughout trading, offsetting any investor inventory imbalance with a trade with the lead underwriter. The paper also helps resolve the disconnect reported in the literature between high initial trading volume and low “flipping” activity.
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Accounting
Authors
Katrina Ellis,