IPO flipping in Australia: Cross-sectional explanations

Bayley, L; Lee, PJ; Walter, TS

IPO flipping in Australia: Cross-sectional explanations

Bayley, L Lee, PJ Walter, TS

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Publisher:: Elsevier
Publication Type:: Journal Article
Citation:: Pacific-Basin Finance Journal, 2006, 14 (4), pp. 327 - 348
Issue Date:: 2006-01

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Field	Value	Language
dc.contributor.author	Bayley, L	en_US
dc.contributor.author	Lee, PJ	en_US
dc.contributor.author	Walter, TS	en_US
dc.date.issued	2006-01	en_US
dc.identifier.citation	Pacific-Basin Finance Journal, 2006, 14 (4), pp. 327 - 348	en_US
dc.identifier.issn	0927-538X	en_US
dc.identifier.uri	http://hdl.handle.net/10453/10022
dc.description.abstract	We access electronic share settlement records for each subscriber and aftermarket investor in 419 Australian IPOs to investigate whether initial subscribers flip their allocations, and we relate this flipping behaviour to issuer, shareholder, underwriter and market characteristics. We find that the main determinants are underpricing (consistent with the disposition effect, i.e., a tendency to realise gains before losses), whether the IPO market is hot (a proxy for the representativeness heuristic) and ex ante risk characteristics. When flipping is analysed separately for underpriced and overpriced IPOs we find that the most overpriced IPOs are flipped more than the less overpriced ones, a result which contrasts the disposition effect. This result is due to the action of institutional, rather than individual, investors. We also relate flipping activity to the firm's long-run return, and find that the flipping behaviour of large (informed) investors is unrelated to long-run returns, while uninformed investors consistently flip more of the IPOs that have better long-run returns.	en_US
dc.publisher	Elsevier	en_US
dc.relation.ispartof	Pacific-Basin Finance Journal	en_US
dc.subject.classification	Finance	en_US
dc.title	IPO flipping in Australia: Cross-sectional explanations	en_US
dc.type	Journal Article
utslib.citation.volume	4	en_US
utslib.citation.volume	14	en_US
utslib.for	150201 Finance	en_US
utslib.for	1502 Banking, Finance and Investment	en_US
utslib.for	1501 Accounting, Auditing and Accountability	en_US
pubs.embargo.period	Not known	en_US
pubs.organisational-group	/University of Technology Sydney
pubs.organisational-group	/University of Technology Sydney/Faculty of Business
utslib.copyright.status	closed_access
pubs.consider-herdc	false	en_US
pubs.issue	4	en_US
pubs.volume	14	en_US

Abstract:

We access electronic share settlement records for each subscriber and aftermarket investor in 419 Australian IPOs to investigate whether initial subscribers flip their allocations, and we relate this flipping behaviour to issuer, shareholder, underwriter and market characteristics. We find that the main determinants are underpricing (consistent with the disposition effect, i.e., a tendency to realise gains before losses), whether the IPO market is hot (a proxy for the representativeness heuristic) and ex ante risk characteristics. When flipping is analysed separately for underpriced and overpriced IPOs we find that the most overpriced IPOs are flipped more than the less overpriced ones, a result which contrasts the disposition effect. This result is due to the action of institutional, rather than individual, investors. We also relate flipping activity to the firm's long-run return, and find that the flipping behaviour of large (informed) investors is unrelated to long-run returns, while uninformed investors consistently flip more of the IPOs that have better long-run returns.

Please use this identifier to cite or link to this item:

http://hdl.handle.net/10453/10022