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The Information Content of Prices: A study on differences between integer and non-integer initial public offerings
Uppsala University, Disciplinary Domain of Humanities and Social Sciences, Faculty of Social Sciences, Department of Business Studies.
Uppsala University, Disciplinary Domain of Humanities and Social Sciences, Faculty of Social Sciences, Department of Business Studies.
2019 (English)Independent thesis Basic level (degree of Bachelor), 10 credits / 15 HE creditsStudent thesis
Abstract [en]

The purpose of this thesis is to analyze differences between IPOs with integer (e.g. $20,00) and non-integer (e.g. $20,32) offer prices on the post-decimalization US market. Research on IPOs suggests that there are viable differences between, and valuable information within, integer and non-integer prices. However, proposed effects on the information content of prices as a result of decimalization on US markets in 2001 motivates more up-to-date research on the subject. Our findings show that, while integer IPOs have higher initial return, uncertainty and offer price levels, there is no proof of different information content conveyed within integer and non-integer prices on the post-decimalization market. Consequently, suggesting that neither integer or non-integer prices provide valuable information to market participants, and in extension that decimalization may have influenced the IPO market.

Abstract [sv]

Syftet med den här uppsatsen är att analysera skillnader mellan börsnoteringar med teckningskurser formulerade i heltal (t.ex. $20,00) och icke-heltal (t.ex. $20,32) efter decimaliseringen på den amerikanska marknaden. Tidigare studier har funnit stor skillnad mellan, och värdefull information inom, heltals- och icke-heltalskurser. Efter decimaliseringen på den amerikanska marknaden 2001 har studier dock funnit att prisers informationsinnehåll kan ha förändrats, vilket motiverar mer aktuell forskning inom ämnet. Våra resultat visar att även om börsnoteringar med heltals-kurser har högre initial avkastning, osäkerhet och teckningskursnivå, finns det inga tecken på att det är någon skillnad i informationsinnehåll mellan heltals- och icke-heltalskurser på den amerikanska marknaden efter decimaliseringen. Våra resultat antyder att det inte finns någon värdefull information för marknadsaktörer i huruvida en börsnoterings teckningskurs är formulerad i heltal eller icke-heltal, och i förlängningen att decimaliseringen kan ha påverkat marknaden för börsnoteringar.

Place, publisher, year, edition, pages
2019. , p. 35
Keywords [en]
Initial Public Offering, Integer Pricing, Negotiation Hypothesis, Information Content of Prices, Underpricing, Initial Return, Decimalization
Keywords [sv]
börsnotering, heltalsprissättning, prisers informationsinnehåll, underprissättning, initial avkastning, decimalisering
National Category
Business Administration
Identifiers
URN: urn:nbn:se:uu:diva-388062OAI: oai:DiVA.org:uu-388062DiVA, id: diva2:1331440
Subject / course
Business Studies; Business Studies
Educational program
Bachelor Programme in Business and Economics; Freestanding course
Supervisors
Available from: 2019-06-28 Created: 2019-06-26 Last updated: 2019-06-28Bibliographically approved

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CiteExportLink to record
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