STABILIZING IPOS: THE ROLE OF THE GREENSHOE MECHANISM
Abstract
The Greenshoe option is a widely used price stabilization mechanism in initial public offerings (IPOs), enablingunderwriters to issue additional shares or repurchase stock to maintain market stability. This paper examines theoperational mechanics, advantages, and risks associated with Greenshoe implementation, with a particular focus onits relevance for Uzbek companies. Through an analysis of successful cases, the study highlights how the mechanismenhances liquidity, reduces post-IPO volatility, and strengthens investor confdence. The fndings suggest that theGreenshoe option can be a valuable tool for emerging markets, provided that appropriate regulatory, economic, andoperational conditions are met. Additionally, the paper explores potential barriers to its implementation in Uzbekistan,including legal constraints, market depth, and institutional readiness. By drawing lessons from global best practices, thisstudy offers policy recommendations for adopting the Greenshoe option in Uzbekistan’s evolving capital markets.