Penny Stock IPOs
AbstractWe examine underpricing, long-run returns, lockup periods, and gross spreads for penny stock IPOs over the 1990-1998 period. We find that penny stock IPOs have higher initial returns than ordinary IPOs, but significantly worse long-run underperformance. We also find that penny stock IPOs have longer lockup periods and larger gross spreads. To explore the effect of potential market manipulation, we examine IPOs led by a group of underwriters that were the subject of SEC enforcement actions and/or other penalties. Penny stock issues led by these banks are particularly underpriced and underperform ordinary IPOs led by other underwriters. Copyright (c) 2006 Financial Management Association International.
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Bibliographic InfoArticle provided by Financial Management Association International in its journal Financial Management.
Volume (Year): 35 (2006)
Issue (Month): 1 (03)
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- Cécile Carpentier & Jean-Marc Suret, 2009. "The Survival and Success of Canadian Penny Stock IPOs," CIRANO Working Papers 2007s-28, CIRANO.
- Kenji Kutsuna & William Dimovski & Robert Brooks, 2008. "The Pricing and Underwriting Costs of Japanese REIT IPOs," Journal of Property Research, Taylor & Francis Journals, vol. 25(3), pages 221-239, November.
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