EconPapers    
Economics at your fingertips  
 

Conflicts of Interest in the Underwriting of IPOs and Price Stabilization

Antonio Gledson de Carvalho, Joao Amaro de Matos, Douglas Beserra Pinheiro and Marcio de Sa Mello

FEUNL Working Paper Series from Universidade Nova de Lisboa, Faculdade de Economia

Abstract: Banks that supply capital and simultaneously underwrite securities for the same clients may benefit themselves or their clients at the expenses of investors by overpricing securities. We investigate this issue by analyzing price stabilization and short-term returns of IPOs. Our analysis suggests that equity-conflicted underwriters overprice IPOs and use price stabilization to disguise overpricing. The same does not happen with loan-conflicted underwriters. We also show that the partial adjustment phenomenon may result from price stabilization, since it disappears after the stabilization is over. JEL codes: G24

Keywords: Universal Banking; conflict of interest; underwriting; IPO; price stabilization; aftermarket short covering; partial adjustment (search for similar items in EconPapers)
Pages: 27 pages
Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link)
http://fesrvsd.fe.unl.pt/WPFEUNL/WP2015/Wp596.pdf
Our link check indicates that this URL is bad, the error code is: 500 Can't connect to fesrvsd.fe.unl.pt:443 (Bad file descriptor) (http://fesrvsd.fe.unl.pt/WPFEUNL/WP2015/Wp596.pdf [302 Object moved]--> https://fesrvsd.fe.unl.pt/WPFEUNL/WP2015/Wp596.pdf)

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:unl:unlfep:wp596

Access Statistics for this paper

More papers in FEUNL Working Paper Series from Universidade Nova de Lisboa, Faculdade de Economia Contact information at EDIRC.
Bibliographic data for series maintained by Susana Lopes ().

 
Page updated 2020-02-15
Handle: RePEc:unl:unlfep:wp596