Keywords

initial public offerings, aftermarket performance, insider selling

Abstract

We revisit and extend the topic of secondary share sales and revisions in IPOs. First we test to determine if secondary share sales constitute a negative signal that is captured in aftermarket performance. We find secondary share sales in general are not correlated with poorer initial or long-run performance, but selling by officers and directors is associated with poorer long-run returns. Second, we examine if secondary share revisions (1) reflect selling shareholders’ attempts to conceal private information or (2) are contingent upon whether a firm can reach its goal of raising sufficient capital. We find empirical support for a capital goal, but not for concealment.

Original Publication Citation

Do Secondary Shares in the IPO Process Have a Negative Effect on Aftermarket Performance? with Mingsheng Li and Jing Shi, Journal of Banking and Finance, Vol. 31, Issue 9 (September), 2007, 2612-2631.

Document Type

Peer-Reviewed Article

Publication Date

2007

Publisher

Journal of Banking and Finance

Language

English

College

Marriott School of Business

Department

Finance

University Standing at Time of Publication

Full Professor

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