In many IPOs, the underwriters are granted the option to purchase additional shares from the issuing firm to cover over-allotment (also known as the "greenshoe" option). Explain how over-allotment options work and how they may be used. Why do issuers grant this option? 

Explain the meaning of "secondary shares" and how they differ from "primary shares". Why is the use of a large percentage of secondary shares in an IPO often considered problematic?

IPOs are often seen as an ideal exit scenario for Venture Capitalists. Briefly explain the business model of Venture Capitalists (what type of capital do they invest and what are typical percentage stakes in their target firm?) and explain why they usually already start planning their exit once they are invested.

Investors, regulators, and firms have been discussing a move towards 'ESG' over the past couple of years. In this context, the question of wether "doing good" can coexist with "doing well" financially is debated controversially.

 Discuss what the challenges in identifying a causal relation between a firm's ESG performance and financial performance are. 

What does the academic literature find with regards to this relation?

Answer rating: 100% (QA)

Overallotment options also known as the greenshoe option are granted to underwriters in many IPOs This option allows the underwriters to purchase addi... View the full answer