The Economics of Primary Markets
نویسنده
چکیده
This paper provides an overview of the economics of primary markets to be used in the development of a new Special Study on securities markets. The topics include initial public offerings, follow-ons, and exempt securities issuance. In addition, reasons for the prolonged decline in IPOs are explored. Many of the issues raised in the 1963 Special Study are salient today. The rise of unregistered offerings as well as high underpricing and conflicts of interest in IPOs are all concerns mentioned in the original report. Given the longevity of these issues, researchers should address whether the offering process can be improved or whether the current environment adequately balances the needs of issuers with those of investors and investment bankers. ∗Hanley can be reached at [email protected]. This discussion is heavily based upon my joint work with Susan Chaplinsky, Amy Edwards, Jerry Hoberg, Charles Lee, Katie Moon, Paul Seguin, and Bill Wilhelm. Additional material is from a letter that Jay Ritter and I wrote in support of including primary market transactions in the Consolidated Audit Trail. I also would like to thank Jay Ritter for helpful comments and data as well as Matthew Gustafson, Tom Hanley, Alexander Ljunqvist, Michelle Lowry, Roni Michaely, and Stanislava Nikolova. This paper was written with the financial support of The Program in the Law and Economics of Capital Markets, a joint program of Columbia Law School and Columbia Business School, where the author is a Program Fellow. Raising capital from the general public is a market feature of the American economic system.....Neither the securities acts, the Commission, nor the industry itself fully anticipated the problems arising from the entry of unqualified persons, the spectacular development of the over-the-counter market, the vast number of companies going public for the first time, or a variety of other striking changes. Letter of Transmittal of the Special Study of Securities Markets, 1963
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