Investment banks legally pursue supposedly price stabilizing activities in the aftermarket of IPOs. We model the offering procedure as a signaling game and analyze how the possibility of potentially profitable trading in the aftermarket influences pricing decisions by investment banks. When maximizing the sum of both the gross spread of the offer revenue and profits from aftermarket trading, in...

Foreign IPO firms incur higher issuance costs than domestic firms due to greater information asymmetry and ex ante valuation uncertainty. Little is known about how to overcome such liability of foreignness. This study, based on foreign-listed Chinese firms, shows that pre-IPO financing relationship with investors from the country of listing can effectively mitigate cross-border information fric...

This study examinees the relationship between guide and sale prices for residential properties in Greater Dublin during the recent housing boom. The results indicate that large degrees of divergence can be present and that auctioned properties tend to sell more frequently at a premium to their guide price and that the average level of premium is also higher. These findings are confirmed by econ...

Privatised utilities are typically characterised by both undervaluation and underpricing. When faced with this problem, regulators have tended to employ a market value approach to determine the regulatory asset base. This paper analyses this approach and shows that any error at privatisation is magnified and that relative errors remain entrenched forever. We suggest an alternative, i.e., the re...

We provide a new explanation for the apparent underpricing of initial public o®erings applicable to large, regulated ̄rms like telecommunications companies. Under the assumption that regulation is subject to political pressure by voters we demonstrate that it may be rational for issuers to ration investors in order to insure a broad distribution of shares in the population. At the same time we ...

The proposed model, by incorporating both 1) banker screening of new issues and 2) costly evaluation by investors, is the first to admit endogenous double-sided information production. It demonstrates a nontrivial link between these two sides: the banker wishes to structure a sale conducive to investor research because selling to an uninformed pool would result in his own shirking. One applicat...

This paper develops a model that jointly explains the frequent excess demand for performance events and the presence of anti-scalping laws. The explanation is based on the fact that the buyers of tickets are also an important input into the performance experience. If buyer wealth is negatively correlated with that particular buyer’s suitability as an input, the use of lineups as a screening mec...

Uniform-price auctions of a divisible good in fixed supply admit underpricing equilibria, where bidders submit high inframarginal bids to prevent competition on prices. The seller can obstruct this behavior by tilting her supply schedule and making the amount of divisible good on offer change endogenously with its (uniform) price. Precommitting to an increasing supply curve is a strategic instr...