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Initial public offerings on the UK when-issued market

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  • Khurshed, Arif
  • Kostas, Dimitris
  • Mohamed, Abdulkadir
  • Saadouni, Brahim

Abstract

We examine the determinants of an IPO firm's decision to trade on a when-issued market and find that better quality firms are more likely to trade on this market. Our ‘what-if’ analysis shows that for companies that choose to have when-issued trading, the actual offer price is almost 26% higher than it would have been had these firms chosen not to trade on this market. We interpret this higher offer price as a ‘rent’ that investors pay to acquire shares of such companies. We also show that the informational accuracy of the UK when-issued market is better than that of continental European when-issued markets.

Suggested Citation

  • Khurshed, Arif & Kostas, Dimitris & Mohamed, Abdulkadir & Saadouni, Brahim, 2018. "Initial public offerings on the UK when-issued market," Journal of Corporate Finance, Elsevier, vol. 49(C), pages 1-14.
    • Handle: RePEc:eee:corfin:v:49:y:2018:i:c:p:1-14
    DOI: 10.1016/j.jcorpfin.2017.12.018
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    Cited by:

    1. Jelic, Ranko & Zhou, Dan & Ahmad, Wasim, 2021. "Do stressed PE firms misbehave?," Journal of Corporate Finance, Elsevier, vol. 66(C).

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    More about this item

    Keywords

    IPOs; When-issued market; Grey market; Rent; Retail investors; London Stock Exchange;
    All these keywords.

    JEL classification:

    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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