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Marketing Closed‐End Fund IPOs: An Analysis of the International Stock Funds

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  • David C. Leonard
  • Terry D. Nixon
  • David M. Shull

Abstract

Various studies argue that underwriting fees are excessive and investment bankers prolong the price stabilization period in aftermarket trading of closed‐end fund (CEF) shares. The poor performance of these funds also raises questions about the financial sophistication of initial public offering (IPO) buyers. In this study, we examine these issues for a sample of international stock CEFs. Our findings indicate that underwriting fees are not excessive relative to industrial issues, and we do not find that investment bankers prolong the stabilization period to camouflage the underwriting cost. Our findings are consistent with earlier studies that discounts contribute significantly to the poor performance during the first six months of aftermarket trading.

Suggested Citation

  • David C. Leonard & Terry D. Nixon & David M. Shull, 2005. "Marketing Closed‐End Fund IPOs: An Analysis of the International Stock Funds," The Financial Review, Eastern Finance Association, vol. 40(4), pages 497-518, November.
    • Handle: RePEc:bla:finrev:v:40:y:2005:i:4:p:497-518
    DOI: 10.1111/j.1540-6288.2005.00121.x
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    References listed on IDEAS

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