When the underwriter is the market maker: An examination of trading in the IPO aftermarket

• 成果类型: Article
• 署名作者: Ellis, K; Michaely, R; O'Hara, M
• 署名单位: Cornell University; Tel Aviv University
• 刊物名称: JOURNAL OF FINANCE
• ISSN/ISSBN: 0022-1082
• DOI: 10.1111/0022-1082.00240
• 发表日期: 2000
• 页码: 1039-1074
• 关键词: initial public offerings; PRICE STABILIZATION; issues

摘要

This paper examines aftermarket trading of underwriters and unaffiliated market makers in the three-month period after an IPO. We find that the lead underwriter is always the dominant market maker; he takes substantial inventory positions in the aftermarket trading, and co-managers play a negligible role in aftermarket trading. The lead underwriter engages in stabilization activity for less successful IPOs, and uses the overallotment option to reduce his inventory risk. Compensation to the underwriter arises primarily from fees, but aftermarket trading does generate positive profits, which are positively related to the degree of underpricing.