Security design in initial public offerings
Publication
, Journal Article
Chakraborty, A; Gervais, S; Yilmaz, B
Published in: Review of Finance
April 1, 2011
We investigate an IPO security design problem when information asymmetries across investors lead to a winner's curse. Firms that are riskier in down markets can lower the cost of going public by using unit IPOs, in which equity and warrants are combined into a non-divisible package. Furthermore, firms that have a sizeable growth potential even in bad states of the world can fully eliminate the winner's curse problem by making the warrants callable. Our theory is consistent with the prominent use of unit IPOs and produces empirical implications that differentiate it from existing theories. © The Authors 2010. Published by Oxford University Press.
Duke Scholars
Published In
Review of Finance
DOI
EISSN
1573-692X
ISSN
1572-3097
Publication Date
April 1, 2011
Volume
15
Issue
2
Start / End Page
327 / 357
Related Subject Headings
- Finance
- 3502 Banking, finance and investment
- 3501 Accounting, auditing and accountability
- 1502 Banking, Finance and Investment
- 1501 Accounting, Auditing and Accountability
Citation
APA
Chicago
ICMJE
MLA
NLM
Chakraborty, A., Gervais, S., & Yilmaz, B. (2011). Security design in initial public offerings. Review of Finance, 15(2), 327–357. https://doi.org/10.1093/rof/rfp029
Chakraborty, A., S. Gervais, and B. Yilmaz. “Security design in initial public offerings.” Review of Finance 15, no. 2 (April 1, 2011): 327–57. https://doi.org/10.1093/rof/rfp029.
Chakraborty A, Gervais S, Yilmaz B. Security design in initial public offerings. Review of Finance. 2011 Apr 1;15(2):327–57.
Chakraborty, A., et al. “Security design in initial public offerings.” Review of Finance, vol. 15, no. 2, Apr. 2011, pp. 327–57. Scopus, doi:10.1093/rof/rfp029.
Chakraborty A, Gervais S, Yilmaz B. Security design in initial public offerings. Review of Finance. 2011 Apr 1;15(2):327–357.
Published In
Review of Finance
DOI
EISSN
1573-692X
ISSN
1572-3097
Publication Date
April 1, 2011
Volume
15
Issue
2
Start / End Page
327 / 357
Related Subject Headings
- Finance
- 3502 Banking, finance and investment
- 3501 Accounting, auditing and accountability
- 1502 Banking, Finance and Investment
- 1501 Accounting, Auditing and Accountability