Articlebronze1999

The Persistence of IPO Mispricing and the Predictive Power of Flipping

Laurie Krigman · Wayne H. Shaw · Kent L. Womack

393 citations0/0 files storedThe Journal of Finance

No readable copy stored yet — this record is metadata only.

No open-access location is known for this record yet.

Literature note Cite in a project Citation map

Financial Markets and Investment Strategies Corporate Finance and Governance Financial Analysis and Corporate Governance

Abstract

Abstract 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 first‐day dogs continue to be relative dogs. Exceptions are “extra‐hot” IPOs, which provide the worst future performance. We also demonstrate that large, supposedly informed, traders “flip” IPOs that perform the worst in the future. IPOs with low flipping generate abnormal returns of 1.5 percentage points per month over the first six months beginning on the third day. We show that flipping is predictable and conclude that underwriters' pricing errors are intentional.

Paper brief

Loading…

Cite this work

Citation unavailable for this work.

BibTeX RIS CSL-JSON

No public copy is stored for this record, so only the metadata is cited.

Citations in this library

Citation map →

Stored only when both papers are in the corpus — 393 citations exist upstream.

References

1993Common risk factors in the returns on stocks and bonds 1975Judgment under Uncertainty: Heuristics and Biases 1997On Persistence in Mutual Fund Performance 1993Returns to Buying Winners and Selling Losers: Implications for Stock Market Efficiency 1982Judgment under Uncertainty 1996Multifactor Explanations of Asset Pricing Anomalies 1984Judgment Under Uncertainty: Heuristics and Biases.1982Judgment under uncertainty: Causality and attribution

Cited by

2010The Variability of IPO Initial Returns 2000Stabilization Activities by Underwriters after Initial Public Offerings 2003Bookbuilding: How Informative Is the Order Book?2003Auctions vs. Bookbuilding and the Control of Underpricing in Hot IPO Markets 2017Financial Wealth, Socioemotional Wealth, and IPO Underpricing in Family Firms: A Two-stage Gamble Model 2003Allocation of initial public offerings and flipping activity

Explore the map →

Papers that cite the same references — the relational fallback while embeddings are still backfilling.

Imported from OpenAlex (CC0) — nothing here is generated.