TY - CONF A1 - Franzke, Stefanie A. A1 - Schlag, Christian T1 - Over-allotment options in IPOs on Germany's Neuer Markt - an empirical investigation T2 - EFMA 2004 Basel Meetings Paper T2 - Center for Financial Studies (Frankfurt am Main): CFS working paper series ; No. 2002,16 N2 - Over-allotment arrangements are nowadays part of almost any initial public offering. The underwriting banks borrow stocks from the previous shareholders to issue more than the initially announced number of shares. This is combined with the option to cover this short position at the issue price. We present empirical evidence on the value of these arrangements to the underwriters of initial public offerings on the Neuer Markt. The over-allotment arrangement is regarded as a portfolio of a long call option and a short position in a forward contract on the stock, which is different from other approaches presented in the literature. Given the economically substantial values for these option- like claims we try to identify benefits to previous shareholders or new investors when the company is using this instrument in the process of going public. Although we carefully control for potential endogeneity problems, we find virtually no evidence for a reduction in underpricing for firms using over-allotment arrangements. Furthermore, we do not find evidence for more pronounced price stabilization activities or better aftermarket performance for firms granting an over-allotment arrangement to the underwriting banks. EFM Classification: 230, 410 KW - Deutschland KW - Börsenzulassung KW - Going Public KW - Wertpapieremission KW - Call-Option KW - Exotic options KW - Optionsgeschäft KW - Optionshandel KW - Optionsmarkt KW - Put-Option KW - Optionspreistheorie KW - Schätzung KW - Neuer Markt KW - Neuer Markt KW - New Economy KW - Over-Allotment Option KW - Flotation Costs KW - Underwriter Fee KW - Neuer Markt Y1 - 2003 UR - http://publikationen.ub.uni-frankfurt.de/frontdoor/index/index/docId/35709 UR - https://nbn-resolving.org/urn:nbn:de:hebis:30:3-357093 UR - http://ssrn.com/abstract=384120 IS - This Version: October, 2003 ER -