The Persistence of IPO Mispricing and the Predictive Power of Flipping  

Oleh:

Krigman, Laurie ; Shaw, Wayne H. ; Womack, Kent L.

Jenis: Article from Journal - ilmiah internasional
Dalam koleksi: The Journal of Finance (EBSCO) vol. 54 no. 3 (Jun. 1999), page 1015-1044.
Fulltext: 1015.pdf (1.04MB)

Isi artikel

This paper examines underwriters’ pricing errors and the information content of firstday trading activity in IPOs. We show that first-day winners continue to be winners over the first year, and first-day dogs continue to be relative dogs. Exceptions are “extrahot” IPOs, which provide the worst future performance. We also demonstrate that large, supposedly informed, traders “f lip” IPOs that perform the worst in the future. IPOs with low f lipping generate abnormal returns of 1.5 percentage points per month over the first six months beginning on the third day. We show that f lipping is predictable and conclude that underwriters’ pricing errors are intentional.

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