Penny Stock IPOs
We 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.
Year of publication: |
2006
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Authors: | Bradley, Daniel J. ; John W. Cooney Jr. ; Dolvin, Steven D. ; Jordan, Bradford D. |
Published in: |
Financial Management. - Financial Management Association - FMA. - Vol. 35.2006, 1, p. 5-29
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Publisher: |
Financial Management Association - FMA |
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