Abstract
Asian initial public offerings (IPOs) require investors to pay subscription funds up-front upon submission of applications, and these funds are locked-up for 1-3 weeks without interest. Hence, the IPO process entails an explicit financing cost (opportunity cost) whether investors borrow funds or use their own funds to apply for IPO shares. The IPO subscription costs are not trivial, especially in a high interest rate environment or when an IPO is highly oversubscribed. These costs should be considered in any comparison of IPO returns across countries.
Original language | English |
---|---|
Pages (from-to) | 459-465 |
Number of pages | 7 |
Journal | Journal of Corporate Finance |
Volume | 10 |
Issue number | 3 |
DOIs | |
Publication status | Published - Jun 2004 |
Scopus Subject Areas
- Business and International Management
- Finance
- Economics and Econometrics
- Strategy and Management
User-Defined Keywords
- Asian IPOs
- Initial public offerings
- Non-discretionary allocation