Signaling in the Internet Craze of Initial Public Offerings
We explain the clustering of underpricing in initial public o.erings (IPOs). The model features an industry with aggregate demand uncertainty and asymmetric information about firms’ quality. In the IPO market, firms can signal quality by underpricing or under-issuing new shares. Expected aggregate demand for the industry’s products increases with the publicity that the industry creates through IPO underpricing. We show that asymmetric information and expectations on aggregate product demand interact with each other to generate multiple equilibria. Underpriced IPOs cluster in one equilibrium but not in the other. We use these results to explain why the clustering often occurs in particular industries, is short-lived, and is sensitive to economic conditions.
Initial public o.ering Clustering Signaling Multiple equilibria.
Melanie Cao Shouyong Shi
Finance Area Schulich School of Business York University, Toronto Ontario, Canada, M3J 1P3 Department of Economics University of Toronto 150 St. George Street, Toronto Ontario, Canada, M5S 3G
国际会议
西安
英文
2006-07-17（万方平台首次上网日期，不代表论文的发表时间）