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Seasonal Affective Disorder And Ipo Underpricing: Implications For Young Firms, Steven Dolvin, Stephanie Fernhaber
Seasonal Affective Disorder And Ipo Underpricing: Implications For Young Firms, Steven Dolvin, Stephanie Fernhaber
Steven D. Dolvin
A critical event in the life of a firm is when it undergoes an initial public offering (IPO). Drawing on the Seasonal Affective Disorder (SAD) literature, which evidences a psychological condition that produces heightened pessimism and risk aversion during the fall and winter months, this study focuses on understanding the potential implications of SAD for young firms. Our results confirm the influence of SAD on IPO underpricing and demonstrate that younger firms experience even higher underpricing during periods most heavily associated with SAD. However, we find that using a higher-quality underwriter or changing the share retention decision can mitigate this …
Underpricing, Overhang, And The Cost Of Going Public To Preexisting Shareholders, Steven Dolvin, Bradford Jordan
Underpricing, Overhang, And The Cost Of Going Public To Preexisting Shareholders, Steven Dolvin, Bradford Jordan
Steven D. Dolvin
IPO underpricing has been extensively studied; however, its impact on the wealth of preexisting shareholders has not been closely examined. We address the question of whether or not periods of high underpricing adversely affect preexisting shareholders. We find that high levels of underpricing are associated with increased share retention, which effectively offsets much of the potential cost. Overall, we find that the percentage of shareholder wealth lost is surprisingly stable over time, unlike underpricing itself. We also find that many factors known to be related to underpricing are not significant determinants of the cost of going public to preexisting owners.