Allocation of Initial Public Offerings and Flipping Activity

  title={Allocation of Initial Public Offerings and Flipping Activity},
  author={Reena Aggarwal},
There is general misperception that the large trading volume in initial public offerings (IPOs) in the aftermarket is mostly due to "flippers" that are allocated shares in the offering and immediately resell them in the aftermarket when the stock starts trading. We find that on average flipping accounts for only 19 percent of trading volume (median of 17 percent) and 15 percent of shares offered (median of 7 percent) during the first two days of trading; institutions do more flipping than… 
The Irrational and Rational Sides of IPO Flippers
Initial public offering (IPO) flippers are investors who are initially allocated shares at the offer price and immediately resell them. Using a large sample of 2003 IPOs in China from January 1995 to
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Flipping Behavior after IPOs
2) We analyze cause and effect of Korean institutional investors’ selling behavior of IPO shares right after initial trading. Most of IPO shares sold by institutions right after initial trading are
The Role of Institutional Investors in Initial Public Offerings
In this article, we use a large sample of transaction-level institutional trading data to analyze the role of institutional investors in initial public offerings (IPOs). The theoretical literature on
Does Noise Signal Affect Flipping Activities
In this paper, we report the explanatory power of noise signal and fundamentals on flipping activities of share trading. Flipping is defined as the percentage of opening day trading volume divided by


Do Underwriters Encourage Stock Flipping? A New Explanation for the Underpricing of Ipos
Disagreement persists about why IPOs are underpriced on average. In part because the more popular theories?based on asymmetric information, signaling, cascades, or investor feedback?are difficult to
Global Trends in IPO Methods: Book Building vs. Auctions with Endogenous Entry
The U.S. book building method has become increasingly popular for initial public offerings (IPOs) worldwide over the last decade, whereas sealed bid IPO auctions have been abandoned in nearly all of
How Stock Flippers Affect IPO Pricing and Stabilization
  • R. Fishe
  • Business, Economics
    Journal of Financial and Quantitative Analysis
  • 2002
Abstract Stock flippers pose a problem for underwriters of initial public offerings (IPOs). They subscribe to the issue, but immediately resell their shares, which may depress the aftermarket price.
Stabilization Activities by Underwriters after Initial Public Offerings
Prior research has assumed that underwriters post a stabilizing bid in the aftermarket. We find instead that aftermarket activities are less transparent and include stimulating demand through short
Insider Trading Subsequent to Initial Public Offerings: Evidence from Expirations of Lock-Up Provisions
This paper explores the role of investment bankers and lock-up provisions in the market for new equity issues. In a sample of 1,948 IPOs, we find support for the notion that lock-ups serve as
IPO Allocations: Discriminatory or Discretionary?
We estimate the structural links between IPO allocations, pre-market information production, and initial underpricing returns, within the context of theories of bookbuilding. Using a sample of both
Building the IPO Order Book: Underpricing and Participation Limits with Costly Information
This paper examines the book building mechanism for marketing initial public offerings. We present a model where the underwriter selects a group of investors along with a pricing and allocation
How investment bankers determine the offer price and allocation of new issues
The Persistence of IPO Mispricing and the Predictive Power of Flipping
This paper examines underwriters' pricing errors and the information content of first-day trading activity in IPOs. We show that first-day winners continue to be winners over the first year, and
The Marketing of Closed-End Fund IPOs
This study investigates a well-documented enigma in the finance literature, the aftermarket behavior of closed-end fund initial public offerings (IPOs). Many models with rational agents attribute the