The Impact of Short Interest on the Performance of Tech Initial Public Offerings in the U.S.

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Abstract/Contents

Abstract: This paper shows that short selling is an important component in the trading
of initial public offerings. The finding goes against conventional wisdom in the IPO
literature. Short sellers are informed traders who trade on negative information. Since their trades provide signals to the market, the short interest ratio serves as an indicator of subsequent low returns on a stock. This paper studies data on IPOs in the
technology sector issued on the Nasdaq and NYSE between October 2007 and
December 2015. The multiple regression analysis in this paper evaluates the
performance of returns on tech IPOs based on many variables, including book-to-market ratio, market premium, and firm size. The results provide evidence that the
average tech IPO exhibits a negative relationship between short interest ratio and
abnormal monthly returns during the first year of trading.

Type of resource	text
Date created	May 2017

Author	Fischer, Julieta
Primary advisor	Piazzesi, Monika
Degree granting institution	Stanford University, Department of Economics

Subject	Stanford Department of Economics
Subject	short selling
Subject	initial public offerings
Subject	technology sector
Genre	Thesis

Location	https://purl.stanford.edu/hf858mc1066

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Preferred Citation: Fischer, Julieta. (2017). The Impact of Short Interest on the Performance of Tech Initial Public Offerings in the U.S. Stanford Digital Repository. Available at: https://purl.stanford.edu/hf858mc1066

Stanford University, Department of Economics, Honors Theses

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