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| Author: | Fishe, R. P. H. |
| Title: | How stock flippers affect IPO pricing and stabilization |
| Journal: | Journal of Financial and Quantitative Analysis
2002 : JUN, VOL. 37:2, p. 319-340 |
| Index terms: | Initial public offerings Stock exchanges |
| Language: | eng |
| Abstract: | The paper presents a model how stock flippers affect IPO pricing. The model shows that the underwriter chooses whether to price the issue as a cold, weak or hot IPO. Stock flippers have the geratest effect on pricing in weak IPOs and provide an explanation for underwriter stabilization. In contrast to existing models of stabilization, the underwriter gains from after-market purchases, particularly if the contract with the issuer includes an over-allotment option. |
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