Strategic pricing of equity issues

B-Tier
Journal: Economic Theory
Year: 2002
Volume: 20
Issue: 2
Pages: 271-294

Score contribution per author:

1.005 = (α=2.01 / 2 authors) × 1.0x B-tier

α: calibrated so average coauthorship-adjusted count equals average raw count

Abstract

Consider a general equilibrium model where agents may behave strategically. Specifically, suppose some firm issues new shares. If the primary market price is controlled by the issuing institution and investors' expectations on future equity prices are constant in their share purchases, the share price on the primary market cannot exceed the secondary market share price. In certain cases this may imply strict underpricing of newly issued shares. If investors perceive an influence on future share prices overpriced issues may occur in equilibrium. This provides an example of strategic price manipulation in general equilibrium models with sequential markets.

Technical Details

RePEc Handle
repec:spr:joecth:v:20:y:2002:i:2:p:271-294
Journal Field
Theory
Author Count
2
Added to Database
2026-01-26