Decimalization, IPO aftermath, and liquidity

• Main Authors: CHAROENWONG, Charlie, DING, David K., THONG, Tiong Yang
• Format: text
• Language: English
• Published: Institutional Knowledge at Singapore Management University 2016
• Subjects: Decimalization; IPO aftermath; Underpricing; Liquidity; Corporate Finance; Finance and Financial Management
• Online Access: https://ink.library.smu.edu.sg/lkcsb_research/4765; https://ink.library.smu.edu.sg/context/lkcsb_research/article/5764/viewcontent/DecimalizationIPOaftermatLiquidity_2016_afv.pdf
• Institution: Singapore Management University

We investigate the effect of decimalization on the aftermarket trading of NYSE-listed IPOs. We find that the relation between bid–ask spread and underpricing becomes negative post-decimalization, suggesting that benefits from the increased price competition accrue more to hot IPOs. The quoted depth...