TitleEmerging from bankruptcy with when-issued trading
Publication TypeJournal Articles
Year of Publication2012
AuthorsBrooks, R, Yang, J
JournalThe Financial Review
Volume47
Pagination445-467
Date Published2012
KeywordsDoctoral Program, Finance, MBA
Abstract

We examine the set of firms that emerged from Chapter 11 bankruptcy and traded on a when-issued basis prior to their official return to the regular way in NASDAQ, Amex, or NYSE. We find that this when-issued market is liquid and price efficient. The when-issued closing price is a good indicator of the first closing price in the regular way market. Emerging firms that have when-issued trading experience lower regular way volatility and smaller relative spreads than those without when-issued trading. Our probit regressions show that firm size is an important determinant of the adoption of when-issued trading.

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