Abstract
Initial public offerings that receive secondary market price support from their underwriters are characterized by severely attenuated selling by small-quantity, presumably retail, traders and more aggressive selling by large-quantity, presumably institutional, traders. The increase in institutional trading is concentrated in the first day of trading while the attenuation of retail trading persists. This pattern exists in spite of the likelihood that retail investors receive relatively large initial allocations of (fully-priced) stabilized offers. Thus the evidence is consistent with institutional investors being the primary beneficiaries of price stabilization efforts and with the use of penalty bids to constrain retail selling activity.
Published Version
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