Primary market characteristics and secondary market frictions of stocks

Boehme, Rodney D; Çolak, Gönül

doi:10.1016/j.finmar.2011.11.001

Cited by 24 publications

(21 citation statements)

References 92 publications

(143 reference statements)

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“…We offer one possible reason that IPO firms with abnormal net sales by top executives may exhibit high idiosyncratic risk and, as such, high limits to arbitrage, which prevent arbitrageurs from correcting the stock prices leading to underperformance in the long run. IPO firms are usually young and relatively unknown to the public, which tend to be accompanied by an elevated level of idiosyncratic risk contained in their stocks (Fink et al, 2010; Boehme and Colak, 2012). Alternatively, idiosyncratic risk is a deterrent to arbitrage (Brav, Heaton, and Li, 2010).…”

Section: Discussionmentioning

confidence: 99%

Why Do Insiders Sell Shares Following IPO Lockups?

Chen¹,

Chen²,

Huang³

2012

Financial Management

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We examine long run returns subsequent to the lockup expiration of firms having gone public. We find that returns are negatively associated with abnormal selling by senior executives but unrelated to selling by other insiders. Our results suggest that even though lockup expirations provide an initial opportunity for insiders to diversify their holdings by selling a firm's shares, sales by senior executives are still motivated in part by private information. Sales by other insiders, on the other hand, are consistent with portfolio diversification.

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Section: Discussionmentioning

confidence: 99%

Why Do Insiders Sell Shares Following IPO Lockups?

Chen¹,

Chen²,

Huang³

2012

Financial Management

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“…Reputable underwriters are classified based on three criteria: (i) The number of IPOs they advised as lead underwriters, (ii) the fee requested for the offered services, and (iii) the capital raised for the public offerings HotCold A dummy variable that equals 1 for IPOs listed during a hot period, zero for IPOs that were listed during a cold period. The classification ''Hot period'' and ''Cold period'' is based on the intensity of IPO listing activity and market returns We follow Yung et al (2008), Boehme and Colak (2012), and to define market conditions (hot versus cold) based on the intensity of IPO listing activity and market returns. Hot periods are , 1997.…”

Section: Sizementioning

confidence: 99%

Management earnings forecasts and IPO performance: evidence of a regime change

Boubaker

Gounopoulos

Kallias

et al. 2016

Rev Quant Finan Acc

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Companies undertaking initial public offerings (IPOs) in Greece were obliged to include next-year profit forecast in their prospectuses, until the regulation changed in 2001 to voluntary forecasting. Drawing evidence from IPOs issued in the period 1993-2015, this is the first study to investigate the effect of disclosure regime on management earnings forecasts and IPO long-term performance. The findings show mainly positive forecast errors (forecasts are lower than actual earnings) and higher long-term returns during the mandatory period, suggesting that the mandatory disclosure requirement causes issuers to systematically bias profit forecasts downwards as they opt for the safety of accounting conservatism. The mandatory disclosure requirement artificially improves IPO share performance. Overall, our results show that mandatory disclosure of earnings forecasts can impede capital market efficiency once it goes beyond historical financial information to involve compulsory projections of future performance.

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“…Seasoned companies are quite different and inherently less volatile than newly listed ones (Barry et al, 1991, Boehme and Çolak, 2012, Clarkson and Thompson, 1990, Ibbotson, 1975. Thus, we use two alternative measures of volatility, based on 20 and 126 days of company-specific returns in the aftermarket.…”

Section: Methodsmentioning

confidence: 99%

Warrants in underwritten IPOs: The Alternative Investment Market (AIM) experience

Khurshed

Kostas

Saadouni

2016

Journal of Corporate Finance

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We examine the use of warrants as a part of underwriter compensation in IPOs listed on the Alternative Investment Market (AIM) of the London Stock Exchange. Our results show that, though warrant-issuing IPO firms are riskier, they are usually underwritten by reputable underwriters. Firms that are cash constrained at the time of their IPO are more likely to use warrants. Both market volatility and hot issue markets increase the likelihood of firms issuing warrants. We also find that warrant issuers are able to minimise their total costs of going public, even under a very light regulatory setting with regards non-cash compensation. They incur actual costs of 29.1%, but would have incurred greater costs of 33.8% had they not issued warrants to their underwriters. Overall, our results support the cost minimisation explanation of the use of warrants by UK IPO firms.

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Primary market characteristics and secondary market frictions of stocks

Cited by 24 publications

References 92 publications

Why Do Insiders Sell Shares Following IPO Lockups?

Why Do Insiders Sell Shares Following IPO Lockups?

Management earnings forecasts and IPO performance: evidence of a regime change

Warrants in underwritten IPOs: The Alternative Investment Market (AIM) experience

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