PRICE STABILIZATION IN THE MARKET FOR NEW ISSUES

• 成果类型: Article
• 署名作者: HANLEY, KW; KUMAR, AA; SEGUIN, PJ
• 刊物名称: JOURNAL OF FINANCIAL ECONOMICS
• ISSN/ISSBN: 0304-405X
• DOI: 10.1016/0304-405X(93)90017-6
• 发表日期: 1993
• 页码: 177-197
• 关键词: initial public offerings; BID ASK SPREADS; microstructure; options pricing

摘要

This study examines price stabilization in new equity issues. Stabilization truncates the distribution of post-issue prices at a floor price, lowering the risk of adverse price moves and hence, in a competitive dealer market, reducing the bid-ask spread. Using 1,523 NASDAQ-traded firm-commitment initial public offerings issued between 1982 and 1987, we find that spreads narrow when the market price is close to the offer price and stabilization is most likely. Moreover, significant negative returns are documented after the hypothesized termination of stabilizing activities, suggesting that stabilization, and its cessation, affect market prices.