Abstract
Collusion-based lawsuits surrounding initial and seasoned offerings have been a reoccurring phenomenon. This paper offers a classroom exercise for economics and finance courses that allows students to experience the collusion phenomenon. This is achieved through simulating how underwriters and preferred clients participate in schemes of buying and selling shares of a new stock issue in order to make exorbitant profits. Students experience the consequences when excessive investor demand is not tempered with an understanding of how earning fundamentals determine security value. Most importantly, students gain insight into the ethical responsibilities of those involved in the security issuance process.
Recommended Citation
(2026)
"Collusion and Stock Offerings: A Classroom Exercise for Economics and Finance Classes,"
Journal of Economics and Finance Education: Vol. 7:
Iss.
1, Article 2.
Available at:
https://scholarship.rollins.edu/jefe/vol7/iss1/2
