Decimalization, IPO Aftermath and Liquidity

• Main Authors: Charoenwong, C., DING, David K., Thong, Tiong Yang
• Format: text
• Language: English
• Published: Institutional Knowledge at Singapore Management University 2005
• Subjects: Decimalization; IPO; Underpricing; Liquidity; Aftermath; Finance and Financial Management; Portfolio and Security Analysis
• Online Access: https://ink.library.smu.edu.sg/lkcsb_research/721
• Institution: Singapore Management University

This paper investigates the effect of decimalization on the aftermarket trading of NYSE-listed IPOs. We find that after decimalization, the relation between spreads and underpricing becomes negative, which suggests that the benefits from the increased price competition accrue more to hot IPOs. The d...