Green Shoe Clause

Business / Taxes / Green Shoe Clause: A green shoe clause allows the group of investment banks that underwrite an initial public offering (IPO) to buy and offer for sale 15% more shares at the same offering price than the issuing company originally planned to sell. The clause is activated if demand for shares is more enthusiastic than anticipated and the stock is trading in the secondary market above the offering price. But if demand is weak, and the stock price falls below the offering price, the syndicate doesn’t exercise its option for more shares. This contract provision, which may be acted on for up to 30 days after the IPO, gets its name from the Green Shoe Company, which was the first to agree to sell extra shares when it went public in 1960.

Other Words for Green

Green Adjective Synonyms: verdant, grassy, fresh, leafy, rural, country-like
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Leading Shoe

Technology / Motorcycle / Leading Shoe: A type of drum brake mechanism. The "leading" brake shoe is applied in the direction of the drum rotation. This can either be a single leading shoe or a double (twin) leading shoe design and refers to MORE

Lifting Clause

Business / Real Estate / Lifting Clause: A provision in a junior mortgage that allows the underlying senior loan to be replaced or refinanced so long as the amount of the new senior loan does not exceed the amount of the first lien outstandi MORE

Inflation-Escalator Clause

Business / Finance / Inflation-Escalator Clause: The fact that future inflation rates are not known. It is a possible contributing factor to the makeup of the term structure of interest rates. MORE

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