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The Informational Content of Initial Public Offerings

The Informational Content of Initial Public Offerings ABSTRACT The ability of capital markets to distinguish firms of different value by the size of their initial equity offerings is attenuated when insiders can sell equity more than once. A model is developed in which there is price risk from holding equity between periods. When the uncertainty is small, there must be pooling in the first period. When uncertainty is large, the pooling equilibria dominate the separating equilibrium. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png The Journal of Finance Wiley

The Informational Content of Initial Public Offerings

The Journal of Finance , Volume 44 (2) – Jun 1, 1989

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References (7)

Publisher
Wiley
Copyright
1989 The American Finance Association
ISSN
0022-1082
eISSN
1540-6261
DOI
10.1111/j.1540-6261.1989.tb05066.x
Publisher site
See Article on Publisher Site

Abstract

ABSTRACT The ability of capital markets to distinguish firms of different value by the size of their initial equity offerings is attenuated when insiders can sell equity more than once. A model is developed in which there is price risk from holding equity between periods. When the uncertainty is small, there must be pooling in the first period. When uncertainty is large, the pooling equilibria dominate the separating equilibrium.

Journal

The Journal of FinanceWiley

Published: Jun 1, 1989

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