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Initial public offerings on the UK when-issued market

Arif Khurshed, Dimitris Kostas, Abdulkadir Mohamed and Brahim Saadouni

Journal of Corporate Finance, 2018, vol. 49, issue C, 1-14

Abstract: We examine the determinants of an IPO firm's decision to trade on a when-issued market and find that better quality firms are more likely to trade on this market. Our ‘what-if’ analysis shows that for companies that choose to have when-issued trading, the actual offer price is almost 26% higher than it would have been had these firms chosen not to trade on this market. We interpret this higher offer price as a ‘rent’ that investors pay to acquire shares of such companies. We also show that the informational accuracy of the UK when-issued market is better than that of continental European when-issued markets.

Keywords: IPOs; When-issued market; Grey market; Rent; Retail investors; London Stock Exchange (search for similar items in EconPapers)
JEL-codes: G12 G32 (search for similar items in EconPapers)
Date: 2018
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Handle: RePEc:eee:corfin:v:49:y:2018:i:c:p:1-14