Olin School of Business

The students in the Washington University in St. Louis Master in Finance program have put out a research paper discussing the recent Facebook IPO. It looks like a great piece and really showcases the academic nature of their program. Being able to author an academic level paper and have it get recognized is truly impressive.

Here is an excerpt from the press release:

“Will stock in Facebook, which recently filed for initial public offering (IPO), drop significantly following the end of its IPO lock-up period later this year? It might if the company follows recent trends, finds a new study by graduate students at Washington University in St. Louis.

Written by Borge Klungerbo, Sam Poteat and Jonathan Woo, students in Olin Business School’s masters of science in finance program, the new paper, “A Persistent Anomaly,” finds that negative abnormal returns follow the expiration of IPO share lock-up periods.

An IPO lock-up is a contractual caveat referring to a period of time after a company has initially gone public, usually between 90 to 180 days. During these initial days of trading, company insiders or those holding majority stakes in the company are forbidden to sell any of their shares.

Once Facebook’s lock-up period ends later this year most trading restrictions will be removed.

The lock-up is done to prevent the market from being flooded with too much supply of a company’s stock too quickly.

“In class we’re always taught markets are efficient and that anomalies, should they exist, disappear quickly,” Woo says. “Our research shows differently. More research needs to be performed to see if people can make money from the strategy because if not, then the anomaly would persist.”

The paper won first prize in the recent Indian Institute of Management–Ahmedabad student research competition. It can be found on page 114 of the school’s publication The Efficient Frontier.”

You can read the full release here.

I’ve posted student reviews and placements on the WUSTL program and it is one of the top MSF schools in the country. If you are thinking about getting a master in finance degree you should definitely look into this school.

 

Here is a link to the Washington University in St. Louis Master in Finance program