Do firms get what they pay for? A second thought on over-allotment option in IPOs
Emanuele Bajo (),
Massimiliano Barbi () and
The Quarterly Review of Economics and Finance, 2017, vol. 63, issue C, 219-232
The over-allotment option usually complements an IPO to meet any excess demand and provides underwriters with an incentive to stabilize stock prices in the aftermarket. This clause represents an additional source of compensation to the investment bank, in exchange of some uncertain positive outcomes to the issuing firm. In this paper we provide evidence of the effects of the over-allotment option on underwriting fees, IPO underpricing, and price stabilization, and we document that, contrary to our expectations, this clause does not reduce the underwriting fees and the IPO underpricing, and it does not increase the aftermarket stabilization.
Keywords: Over-allotment option; IPO; Stabilization; Underpricing (search for similar items in EconPapers)
JEL-codes: G14 G32 (search for similar items in EconPapers)
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed
Downloads: (external link)
Full text for ScienceDirect subscribers only
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:eee:quaeco:v:63:y:2017:i:c:p:219-232
Access Statistics for this article
The Quarterly Review of Economics and Finance is currently edited by R. J. Arnould and J. E. Finnerty
More articles in The Quarterly Review of Economics and Finance from Elsevier
Bibliographic data for series maintained by Dana Niculescu ().