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Market Making Contracts, Firm Value, and the IPO Decision

作者: 发布时间:2015-01-21 点击数:
主讲人: Jia Hao
主讲人简介:

Visiting Scholar
Department of Finance
Stephen M. Ross School of Business
University of Michigan

Prof. Jia Hao's CV

主持人: Qian Han (WISE)
讲座简介:
Abstract:
We examine the effects of secondary market liquidity on firm value and the decision to conduct an Initial Public Offering (IPO). Competitive liquidity provision can lead to market failure as the IPO either does not occur or the IPO price is discounted to reflect that some welfare-enhancing secondary trades do not occur. Market failure arises when uncertainty regarding fundamental value and asymmetric information are large in combination. In these cases, firm value and social welfare are improved by a contract where the firm engages a Designated Market Maker (DMM) to enhance liquidity. Our model implies that such contracts represent a market solution to a market imperfection, particularly for small growth firms. In contrast, proposals to encourage IPOs by use of a larger tick size are likely to be counterproductive.

 

时间:2015-01-21(星期三)16:30-18:00
地点:N303 经济楼/Economics Building
讲座语言:English
主办单位:WISE-SOE
承办单位:
期数:
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