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An unusually great number of stock exchange transactions on the first trading day following an IPO/SPO

Author

Listed:
  • Yandiev Magomet

    (Department of Economics, Lomonosov Moscow State University)

Abstract

This paper analyzes the post-IPO stock underpricing phenomenon using a conceptually new approach – on the basis of data on the number of closed exchange dealings in stocks following a public offering, be it an IPO or an SPO. Two time periods when the phenomenon can be observed are identified. A new cause of the occurrence of the phenomenon in the second of those periods is suggested: the phenomenon occurs due to inflated expectations of speculative investors because of the rise in uncertainty on the stock exchange. A correlation is established between the number of dealings in stocks and the volatility of the stock yield in the first days following the public offering. The research is based on 49 IPO/SPO case studies, most of which were done on the Moscow Exchange.

Suggested Citation

  • Yandiev Magomet, 2024. "An unusually great number of stock exchange transactions on the first trading day following an IPO/SPO," Working Papers 0072, Moscow State University, Faculty of Economics.
    • Handle: RePEc:upa:wpaper:0072
    as

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    References listed on IDEAS

    as
    1. Stoll, Hans R. & Curley, Anthony J., 1970. "Small Business and the New Issues Market for Equities," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 5(3), pages 309-322, September.
    2. Rock, Kevin, 1986. "Why new issues are underpriced," Journal of Financial Economics, Elsevier, vol. 15(1-2), pages 187-212.
    3. Ibbotson, Roger G., 1975. "Price performance of common stock new issues," Journal of Financial Economics, Elsevier, vol. 2(3), pages 235-272, September.
    4. Baron, David P, 1982. "A Model of the Demand for Investment Banking Advising and Distribution Services for New Issues," Journal of Finance, American Finance Association, vol. 37(4), pages 955-976, September.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    IPO; SPO; number of transactions; stock exchange; underpricing; stock; Moscow Exchange; Russia;
    All these keywords.

    JEL classification:

    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G41 - Financial Economics - - Behavioral Finance - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making in Financial Markets

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