Anmerkungen:
In: European Journal of Finance, Forthcoming
Nach Informationen von SSRN wurde die ursprüngliche Fassung des Dokuments January 28, 2013 erstellt
Beschreibung:
Why buy a closed-end fund at IPO, when it is likely to trade at a discount in a few months' time? One theory suggests that buying a new fund is justified by an initial period of investment outperformance. A second theory is that new funds are launched to provide access to assets that are temporarily illiquid and to exploit the subsequent liquidity gain while a third theory asserts that buyers of new issues are not fully rational but are influenced by time-varying sentiment. This paper tests the three theories using data from UK-traded closed-end equity-fund IPOs over 1984 to 2006. The empirical results provide strong support for the influence of sentiment but provide little or no support for the two other theories