Glossary entry (derived from question below)
English term or phrase:
green shoe
English answer:
issue reserve
Added to glossary by
John Kinory (X)
Jul 23, 2002 09:27
21 yrs ago
1 viewer *
English term
green shoe
English
Bus/Financial
Has anyone every heard this expression used in Stock Exchange trading? What specifically does it refer to, please?
Responses
| 4 +4 | vedi sotto |
Bilingualduo
|
| 5 +2 | The name derives... |
Alison Schwitzgebel
|
Responses
+4
4 mins
Bilingualduo
Italy
Italy
Native in English
&
English
Italy
Real passion for languages
Native in: English 
, Italian
Works in: English to Italian, Italian to English
Related KudoZ points
:
14
Selected
vedi sotto
Here are a couple of definitions:
Green Shoe An over-allotment option of an underwriting agreement which allows the syndicate the option to purchase additional shares at the original price. The green shoe can be as large as 15% of the original issue size.
Green Shoe
The green shoe is an instrument used to stabilize the stock price in the first few weeks after a corporation goes public. If the stock price rises sharply, the number of newly issued shares is increased. This issue reserve, or green shoe, usually amounts to 10% to 15% of the originally planned issue volume.
HTH
Cristina
Green Shoe An over-allotment option of an underwriting agreement which allows the syndicate the option to purchase additional shares at the original price. The green shoe can be as large as 15% of the original issue size.
Green Shoe
The green shoe is an instrument used to stabilize the stock price in the first few weeks after a corporation goes public. If the stock price rises sharply, the number of newly issued shares is increased. This issue reserve, or green shoe, usually amounts to 10% to 15% of the originally planned issue volume.
HTH
Cristina
Peer comment(s):
| agree |
Enza Longo
6 mins
|
| agree |
Alison Schwitzgebel
: commonly written in one word "greenshoe"
6 mins
|
| agree |
airmailrpl
: both answerers deserve the points
1 hr
|
| agree |
MikeGarcia
3 hrs
|
4 KudoZ points awarded for this answer.
Comment: "Thanks, and very specially to Alison for the additional research!"
+2
20 mins
Alison Schwitzgebel
France
France
Native in English
&
English
France
Words that work
Native in: English , German
Works in: German to English, Germanic(Other) to English, French to English
Related KudoZ points
:
92
The name derives...
...from the first company (The Green Shoe Manufacturing Company) to include such a feature in a publich offering).
Source: Moles & Terry, Handbook of International Financial Terms.
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Note added at 2002-07-23 09:51:18 (GMT)
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Also check out
\"CFOs considering an ini-tial public offering might be interested in a study on howover-allotment options (OAOs) affect underwriter profitsand aftermarket price stabilization. The OAO, also knownas a Green Shoe option (since it first appeared in GreenShoe Manufacturing Co.\'s 1960 offering) generally occurin firm-commitment underwritings. The underwriter mak-ing a firm commitment agrees to purchase a specifiednumber of shares, thereby shielding the issuer from theentire risk of an unsuccessful offering. (In a best-effortsarrangement, the firm does not assume any of the risk bur-den.) If the lead underwriter executes an OAO, it can buymore than the allocated number of shares from the issuer,for distribution among the syndicate members. This allowsthe syndicate to sell more stock than the number officiallystated in the IPO documents-in effect, creating a shortposition. Under NASD rules, the over-allotment cannotexceed 15% of the firm-commitment offering\"
www.bowne.com/newsletters/pdf/review/dec98_1.pdf
Source: Moles & Terry, Handbook of International Financial Terms.
--------------------------------------------------
Note added at 2002-07-23 09:51:18 (GMT)
--------------------------------------------------
Also check out
\"CFOs considering an ini-tial public offering might be interested in a study on howover-allotment options (OAOs) affect underwriter profitsand aftermarket price stabilization. The OAO, also knownas a Green Shoe option (since it first appeared in GreenShoe Manufacturing Co.\'s 1960 offering) generally occurin firm-commitment underwritings. The underwriter mak-ing a firm commitment agrees to purchase a specifiednumber of shares, thereby shielding the issuer from theentire risk of an unsuccessful offering. (In a best-effortsarrangement, the firm does not assume any of the risk bur-den.) If the lead underwriter executes an OAO, it can buymore than the allocated number of shares from the issuer,for distribution among the syndicate members. This allowsthe syndicate to sell more stock than the number officiallystated in the IPO documents-in effect, creating a shortposition. Under NASD rules, the over-allotment cannotexceed 15% of the firm-commitment offering\"
www.bowne.com/newsletters/pdf/review/dec98_1.pdf
Peer comment(s):
| agree |
airmailrpl
: both answerers deserve the points
53 mins
|
| agree |
MikeGarcia
2 hrs
|
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