Do Institutional Investors Play Hide-and-Sell in the IPO Aftermarket?
Nefedova, Tamara; Pratobevera, Giuseppe (2018-02), Do Institutional Investors Play Hide-and-Sell in the IPO Aftermarket?. https://basepub.dauphine.fr/handle/123456789/18745
TypeDocument de travail / Working paper
Lien vers un document non conservé dans cette basehttps://dx.doi.org/10.2139/ssrn.3189086
MétadonnéesAfficher la notice complète
Dauphine Recherches en Management [DRM]
University of Lugano and Swiss Finance Institute
Résumé (EN)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.
Mots-clésIPO allocations; IPO aftermarket trading; laddering; flipping; institutional investors
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