The IPO Quiet Period Revisited
Journal Of Investment Management, Vol. 2, No. 3, Third Quarter 2004
Posted: 16 Sep 2004
Newly public companies are subject to a "quiet period" restricting insiders and affiliated underwriters from issuing earnings forecasts and research reports regarding the firm for a specified period following the initial public offering (IPO). As soon as this quiet period ends, the analysts of managing underwriters typically initiate research coverage with favorable recommendations, and the market responds positively even though this information is predictable. In this article, we discuss previous findings regarding price patterns and analyst initiations at the end of the quiet period and introduce new evidence based on recent trends in the IPO market. We discuss trading implications and examine the effect of new regulatory requirements that extend the quiet period from 25 to 40 calendar days post-IPO.
Keywords: Analyst initiations, Analyst recommendations, Quiet period, Initial Public Offerings
JEL Classification: G00
Suggested Citation: Suggested Citation