Raising capital: On pricing, liquidity, and incentives
This thesis aims to foster a greater understanding of primary market functioning. It aims to be of use as an input in the continuous debate on how we can best shape our financial markets to provide greater affluence for society. It contains three essays, included as separate chapters, that each focus on a separate question related to raising capital via primary markets.
Chapter 2 deals with the market for initial public stock offerings. It shows that stereotypes about industry performance are related to the opening performance of newly issued stocks. Chapter 3 deals with the general market for new equity. It shows that firms issue more new stocks when markets become more liquid; i.e., when it becomes easier to buy or sell large quantities of stocks without having to make adjustments in the price. Chapter 4 deals with the market for new hybrid capital. It shows that banks make riskier decisions after issuing Contingent Convertible bonds.