on the costs of issuing shares

Milne, Frank and Ritzberger, Klaus (April 1991) on the costs of issuing shares. Former Series > Forschungsberichte / Research Memoranda 279


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abstract: the present paper models the process of issuing new equity as a three-stage game. first the issuing firm is allowed to negotiate with several investment-bankers on an underwriting contract. then the shares are issued at a primary market tothe public and, finally, investors can trade shares at a secondary market. under symmetric information the costs of issuing shares in equilibrium consists of two parts: underpricing at the primary market and the cost of an underwriting contract, where the incentive to conclude the latter stems from the danger of even more severe underpricing in a non-underwritten issue.;

Item Type: IHS Series
Date Deposited: 26 Sep 2014 10:34
Last Modified: 01 Apr 2016 14:07
URI: https://irihs.ihs.ac.at/id/eprint/279

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