Signalling and the pricing of new issues

Article Abstract:

This paper develops a signalling model with two signals, two attributes and a continuum of signal levels and attribute types to explain new issue underpricing. Both the fraction of the new issue retained by the issuer and its offering price convey to investors the unobservable "intrinsic" value of the firm and the variance of its cash flows. Many of the model's comparative statics results are novel, empirically testable, and consistent with the existing empirical evidence on new issues. In particular, the degree of underpricing, which can be inferred from observable variables, is positively related to the firm's post-issue share price. (Reprinted by permission of the publisher.)

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How distance, language, and culture influence stockholdings and trades

Article Abstract:

Research on Finnish investment patterns suggests many investors prefer to hold, sell, and buy stocks from companies physically close that communicate in the investor's first language and with a chief executive with the same cultural background. This tendency is less prominent among more experienced investment institutions.

Stocks & Other Equity Securities, Finland, Economic aspects, International aspects

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Financial innovation and the role of derivative securities: an empirical analysis of the Treasury Separate Trading of Registered Interested and Principal of Securities (STRIPS) program

Article Abstract:

The authors examine investments in Treasury bonds. Topics include securities trading, investor relations, and investment pricing.

Methods, Models, Analysis, Laws, regulations and rules, Investments, Treasury securities

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