Definition
Laddering is an investment technique that requires investors to purchase multiple financial products with different maturity dates.
Laddering
What is ‘Laddering’
The promotion of inflated pre-IPO prices for the sake of obtaining a greater allotment of the offering. Laddering is an illegal IPO practice in which the underwriter engages in the sale of IPO shares to clients with the implicit agreement that more shares will be purchased post IPO, leading to big gains for both parties. Once the price increases a certain level, “insiders” then sell their shares and take their profits.
Explaining ‘Laddering’
An underwriter will push up the issue price of an IPO through promotion, in order to please the issuer and secure a larger allotment. By agreeing to allocate additional shares to choice clients, the underwriter and clients can make big gains on the IPO shares, while the firm offering shares in the IPO are happy with the underwriter for creating increased market value.
Further Reading
Laddering in initial public offerings –
www.sciencedirect.com [PDF] Laddering is a practice whereby the allocating underwriter requires the ladderer to buy additional shares of the issuer in the aftermarket as a condition for receiving shares at the offer price. This paper identifies factors that create incentives to engage in this type of …Of belts and ladders: state policy and uneven regional development in post‐Mao China –
onlinelibrary.wiley.com [PDF] Laddering is a practice whereby the allocating underwriter requires the ladderer to buy additional shares of the issuer in the aftermarket as a condition for receiving shares at the offer price. This paper identifies factors that create incentives to engage in this type of …Kicking away the ladder: Infant industry promotion in historical perspective –
www.tandfonline.com [PDF] Laddering is a practice whereby the allocating underwriter requires the ladderer to buy additional shares of the issuer in the aftermarket as a condition for receiving shares at the offer price. This paper identifies factors that create incentives to engage in this type of …Bond portfolio laddering: a mean-variance perspective –
papers.ssrn.com [PDF] Laddering is a practice whereby the allocating underwriter requires the ladderer to buy additional shares of the issuer in the aftermarket as a condition for receiving shares at the offer price. This paper identifies factors that create incentives to engage in this type of …Bond ladders and optimal portfolios –
academic.oup.com [PDF] Laddering is a practice whereby the allocating underwriter requires the ladderer to buy additional shares of the issuer in the aftermarket as a condition for receiving shares at the offer price. This paper identifies factors that create incentives to engage in this type of …An Empirical Study on the Laddering Migration of China’s Floating Population [J] –
en.cnki.com.cn [PDF] Laddering is a practice whereby the allocating underwriter requires the ladderer to buy additional shares of the issuer in the aftermarket as a condition for receiving shares at the offer price. This paper identifies factors that create incentives to engage in this type of …Safety nets and opportunity ladders: Addressing vulnerability and enhancing productivity in South Asia –
onlinelibrary.wiley.com [PDF] Laddering is a practice whereby the allocating underwriter requires the ladderer to buy additional shares of the issuer in the aftermarket as a condition for receiving shares at the offer price. This paper identifies factors that create incentives to engage in this type of …Applying the means-end chain theory and the laddering technique to the study of host attitudes to tourism –
www.tandfonline.com [PDF] Laddering is a practice whereby the allocating underwriter requires the ladderer to buy additional shares of the issuer in the aftermarket as a condition for receiving shares at the offer price. This paper identifies factors that create incentives to engage in this type of …Moving up the ladder or stuck on the bottom rung? Homeownership as a solution to poverty in urban South Africa –
onlinelibrary.wiley.com [PDF] Laddering is a practice whereby the allocating underwriter requires the ladderer to buy additional shares of the issuer in the aftermarket as a condition for receiving shares at the offer price. This paper identifies factors that create incentives to engage in this type of …-
Who benefits from laddering?
The issuer benefits from laddering because they receive more money than they would have otherwise received. Underwriters benefit because they get more business than they would have otherwise gotten and also make bigger profits than they would have made if there was no laddering. Clients benefit because their investment will increase significantly after it goes public due to laddering practices.
What is Laddering?
Laddering is the promotion of inflated pre-IPO prices for the sake of obtaining a greater allotment of the offering.
How does laddering work?
Laddering works by pushing up the issue price of an IPO through promotion, in order to please the issuer and secure a larger allotment. By agreeing to allocate additional shares to choice clients, the underwriter and clients can make big gains on the IPO shares, while the firm offering shares in the IPO are happy with the underwriter for creating increased market value.
What happens when an investor buys into a stock that has been laddered?
Investors who buy into stocks that have been laddered often see significant returns on their investment once those stocks go public as investors who were given access to those stocks before them sell off some or all of their investment at a profit leaving room for other investors to buy into those companies at higher prices than what was available before which means that investors who bought into those companies during or after its initial public offering (IPO) will be able answer 6
Why do issuers like laddering?
Issuers like laddering because it increases their revenue potential without increasing their risk exposure or diluting their ownership stake in their company.
