Underpricing and rationing may occur in many markets, but nowhere is the debate about its cause more vigorous than in the market for initial public offerings (IPOs) of equity. This analysis contributes to the debate by showing that under-pricing is related to profits from after-market trading....

Disagreement persists about why IPOs are underpriced on average. In part because the more popular theories?based on asymmetric information, signaling, cascades, or investor feedback?are difficult to test, we do not know how much underpricing they can explain. We develop an alternative theory...

We first analyze legal provisions relating to corporate transparency in Germany. We show that despite the new securities trading law (WpHG) of 1995, the practical efficacy of disclosure regulation is very low. On the one hand, the formation of business groups involving less regulated legal forms...

We construct a long daily panel of short sales using proprietary NYSE order data. During 2000-2004, shorting accounts for more than 12.9% of NYSE volume, suggesting that short-sale constraints are not widespread. As a group, these short sellers are quite well-informed. Heavily shorted stocks...

The percentage of U.S. equity held by institutional investors has quadrupled in the past four decades, and a prominent share of trading activity is due to institutions. Yet we know little about how institutions affect the informational efficiency of share prices, one important dimension of...

We test recent theories of when companies go public which predict that 1) more companies will go public when outside valuations are high or have increased, 2) companies prefer going public when uncertainty about their future profitability is high, and 3) firms whose controlling shareholders...