Do Institutional Investors Play Hide-and-Sell in the IPO Aftermarket?

Tamara Nefedova and Giuseppe Pratobevera ()
Additional contact information
Tamara Nefedova: DRM - Dauphine Recherches en Management - Université Paris Dauphine-PSL - PSL - Université Paris Sciences et Lettres - CNRS - Centre National de la Recherche Scientifique

Post-Print from HAL

Abstract: We document a robust buy/sell asymmetry in the choice of the broker in the IPO aftermarket: institutional investors are less likely to sell than buy through the lead underwriters. Consistent with investors hiding their sell trades, the asymmetry is the strongest in cold IPOs and it is limited exclusively to the first month after the issue. Contrary to the conventional view, the intention to flip IPO allocations is not an important motive for hiding sell trades from the lead underwriters; institutions that sell shares through non-lead brokers tend to have bought them through the lead underwriters in the IPO aftermarket, consistent with institutions breaking their laddering agreements. We find that hiding sell trades is an effective strategy to circumvent underwriters' monitoring mechanisms: the more institutions hide their sell trades, the less they are penalized in subsequent IPO allocations.

Keywords: IPO allocations; IPO aftermarket trading; laddering; flipping; institutional investors (search for similar items in EconPapers)
Date: 2018-02
Note: View the original document on HAL open archive server: https://hal.science/hal-02108887v1
References: View references in EconPapers View complete reference list from CitEc
Citations:

Published in Social Sciences Research Network, 2018, ⟨10.2139/ssrn.3189086⟩

Downloads: (external link)
https://hal.science/hal-02108887v1/document (application/pdf)

Related works:
Journal Article: Do institutional investors play hide-and-sell in the IPO aftermarket? (2020)
Working Paper: Do institutional investors play hide-and-sell in the IPO aftermarket? (2020)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-02108887

DOI: 10.2139/ssrn.3189086

Access Statistics for this paper

More papers in Post-Print from HAL
Bibliographic data for series maintained by CCSD ().