Ljungqvist, Alexander; Nanda, Vikram; Singh, Rajdeep - In: The Journal of Business 79 (2006) 4, pp. 1667-1702
We model an IPO company's optimal response to the presence of sentiment investors. "Regular" investors are allocated stock that they subsequently sell to sentiment investors. Because sentiment demand may disappear prematurely, carrying IPO stock in inventory is risky, so for regulars to break...