Best Efforts vs. Firm Commitment Initial Public Offerings: Evidence on the Market Feedback Theory

Ann Sherman

Review of Pacific Basin Financial Markets and Policies (RPBFMP), 1999, vol. 02, issue 03, 399-417

Abstract: This paper documents the differences between best efforts and firm commitment U.S. IPOs and looks for evidence of the Sherman (1992) market feedback theory. A probit model of the contract choice is estimated. Best efforts offerings are shown to be, on average, smaller offerings from smaller, younger companies, many of them start-ups. They have higher average initial returns and a higher variance of initial returns, and they are less likely to include shares sold by insiders. The data is consistent with the implications of the market feedback theory.

JEL-codes: G1 G2 G3 (search for similar items in EconPapers)
Date: 1999
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.worldscientific.com/doi/abs/10.1142/S0219091599000217
Access to full text is restricted to subscribers

Related works:
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:wsi:rpbfmp:v:02:y:1999:i:03:n:s0219091599000217

Ordering information: This journal article can be ordered from

DOI: 10.1142/S0219091599000217

Access Statistics for this article

Review of Pacific Basin Financial Markets and Policies (RPBFMP) is currently edited by Cheng-few Lee

More articles in Review of Pacific Basin Financial Markets and Policies (RPBFMP) from World Scientific Publishing Co. Pte. Ltd.
Bibliographic data for series maintained by Tai Tone Lim ().