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SUMMARY:Short-Sales Constraints and Aftermarket IPO Pricing  - Richard G. 
 Sloan\, Professor\,  Emile R. Niemela Chair in Accounting and Internationa
 l Business Haas Accounting Group
DTSTART:20180503T120000Z
DTEND:20180503T130000Z
UID:TALK74321@talks.cam.ac.uk
CONTACT:CERF/CF Admin
DESCRIPTION:Abstract\n\nIt is well established that initial public offerin
 gs (IPOs) tend to experience positive first-day returns followed by abnorm
 ally low subsequent returns\, especially around the expiration of lockup a
 greements. Miller’s (1977) overvaluation theory offers a unified explana
 tion of aftermarket IPO pricing based on divergence of investor opinion ab
 out fundamental value combined with short-sales constraints. While prior s
 tudies are inconclusive with respect to the importance of short-sales cons
 traints in the IPO aftermarket\, we find robust evidence consistent with M
 iller’s theory. Our research design employs detailed data from the secur
 ities lending market and ex ante identifies IPOs with high divergence of i
 nvestor opinion and limited floating stock. We show that these IPOs drive 
 prior evidence of overpricing in the aftermarket\, as indicated by positiv
 e first-day returns followed by negative lockup returns\, and that the sup
 ply of lendable shares is severely constrained for these IPOs\, thereby li
 miting short sellers’ effectiveness to arbitrage overpricing. \n
LOCATION:Room W4.03 Cambridge Judge Business School
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