Journal of Financial Economics Vol. 79 No. 2 2006
Who trades IPOs? A close look at the first days of trading☆
Abstract
I examine the enormous trading volume in the first two days of trading following an initial public offering (IPO) with a sample of Nasdaq IPOs. The composition of trading varies widely with the initial return and not all trading is investor-related. Cold IPOs have a high proportion of interdealer sell trades, whereas hot IPOs have balanced investor buying and selling. Market makers hold zero inventory throughout trading, offsetting any investor inventory imbalance with a trade with the lead underwriter. The paper also helps resolve the disconnect reported in the literature between high initial trading volume and low “flipping” activity.
- DOI
- 10.1016/j.jfineco.2004.09.006
- Volume
- 79
- Issue
- 2
- Pages
- 339-363
- Language
- en
- Sources
- bibtex:phds-export.bib openalex crossref