Laddering in Initial Public Offerings

Laddering in Initial Public Offering Allocations

“…If some allocated investors pay a part of their pro…t from IPO allocations back to the underwriter through brokerage commission payments, then a part of the laddering generated pro…ts will go back to the underwriter. Hao (2007) argue that when the underwriter share in on the pro…t from the underpricing, laddering is stronger when the realized percentage underpricing is higher. Hao (2007) also show that expected underpricing increases IPO laddering.…”

“…Investment banks rank investors on A, B and C lists before the IPO allocations. 12 We do not know how investors are placed on the lists, but we believe that it is related to the investors'past trading characteristics. Investors on the A list are likely to be rationed less than investors on the B list, and investors on the B list are likely to be rationed less than investors on the C list.…”

“…Hao (2007) …rst show the factors that create the incentives to engage in IPO laddering. Then, the e¤ects of IPO laddering on companies are identi…ed.…”

“…Then, the e¤ects of IPO laddering on companies are identi…ed. Hao (2007) argue that IPO laddering can bene…t the underwriter from two sources. First, IPO laddering could boost the after-listing market price.…”

“…More expected underpricing contributes to a greater extent of laddering. Hao (2007) predicts that listing trading on the investor level. Gri¢ n et al (2007) show that it is likely that laddering is being used by investigating through what manager after-listing buy orders are placed, and we show that after-listing buy orders are related to current and future IPO allocations by investors.…”