publication . Preprint . 2009

Optimal Initial Public O¤ering design with aftermarket trading.

Fabrice Rousseau; Sarah Parlane;
Open Access
  • Published: 01 Jan 2009
We characterize the optimal pricing and allocation of shares in the presence of distinct adverse selection problems. Some investors have private information at the time of the IPO and sell their shares in the after-market upon facing liquidity needs. Others learn their private interest in the after-market, and sell their shares strategically. The optimal mechanism trades-o¤ informational rents and rents to strategic traders. Flipping facilitates truthful information revelation. When liquidity needs are likely, it is optimal to allocate all shares to investors informed at the IPO stage. Otherwise, some shares are allocated to those who trade strategically in the ...
ACM Computing Classification System: ComputingMilieux_COMPUTERSANDSOCIETY

Aggarwal, R., 2000. Stabilization Activities by Underwriters after IPOs. Journal of Finance, 55, 1075-1103.

Bennouri, M, Falconieri, S., 2006. Optimal auctions with asymmetrically informed bidders. Economic Theory, 28, 585-602.

Benveniste, L. M., Spindt, P. A., 1989. How investment bankers determine the o¤er price and allocation of new issues. Journal of Financial Economics, 24, 343-361. [OpenAIRE]

Benveniste, L. M., Wilhelm, W., 1990. A comparative analysis of IPO proceeds under alternative regulatory environments. Journal of Financial Economics, 28, 173-208.

Biais, B., Faugeron-Crouzet, A. M., 2002. IPO Auctions: English, Dutch,..., idence on How Companies Raise Equity Finance. Oxford University Press, Oxford, Second Edition.

Krigman, L., Shaw, W. H., Womack, K. L., 1999. The Persistence of IPO Mispricing and the Predictive Power of Flipping. Journal of Finance, 54, 1015- 1044.

Libby, R., Bloom‡ied, R., Nelson, M. W., 2002. Experimental Research in Financial Accounting. Accounting, Organizations and Society, 27, 775-810.

Minnigoulov, B. A., 2001. Post-IPO Flipping and Turnover: Predictive Factors for Long-Run Returns. Unpublished manuscript, Dartmouth College.

Peng, L., 2005. Learning with Information Capacity Constraints. Journal of Financial Quantitative Analysis, 40, 307-329.

Sherman, A., 2000. IPOs and Long-Term Relationships: An Advantage of Book Building. Review of Financial Studies, 13, 697-714.

Sherman, A., Titman, S., 2002. Building the IPO Order Book: Underpricing and Participation Limits with Costly Information. Journal of Financial Economics, 65, 3-2 0kuk+1xk+1 (+ ) [OpenAIRE]

Powered by OpenAIRE Open Research Graph
Any information missing or wrong?Report an Issue