Template-Type: ReDIF-Paper 1.0
Author-Name:  Andrea Maria Accioly Fonseca Minardi
Author-Name-First: Andrea Maria Accioly Fonseca
Author-Name-Last: Minardi
Author-Name:  Rodrigo Menon Moita
Author-Name-First: Rodrigo Menon
Author-Name-Last: Moita
Author-Name:  Rafael Plantier Castanho
Author-Name-First: Rafael Plantier
Author-Name-Last: Castanho
Title: An investigation of the partial adjustment effect of Brazilian IPOs
Abstract:  Initial public offer (IPO) is an alternative for companies to finance investments, for families to sell part or the total of their stake, and for private equity to exit. Although bookbuilding process reduces information asymetry and underpricing in IPOs, global literature reports positive first day return. When the underwriter perceives high demand, he or she adjusts upward the offer price, but not the full fair price. This partial adjustment creates positive first day return, which is used to compensate informed investors for revealing truthful information during the pre deal period. We investigate Brazilian IPOs issued between 2004 and 2012 and find evidence of partial adjustment in Brazil. Pre-deal information predicts both, underpricing and the exercise of greenshoe option.
Length:  31 pages
Creation-Date:  2013
Order-URL: https://repositorio.insper.edu.br/handle/11224/5952
File-URL: https://repositorio.insper.edu.br/handle/11224/5952
File-Format: text/html
File-Function: Full text
Number: 191
Handle: RePEc:aap:wpaper:191