medium · Investment Banking rx-dcm-ecm
If an underwriter exercises the greenshoe, the company issues shares and receives cash.
Where does this 'extra' cash appear on the company's balance sheet?
- Cash increases, and Retained Earnings increases.
- Cash increases, and Common Stock / APIC increases.
- The cash is held in an 'Underwriter Escrow' account and is not on the company's balance sheet.
- Cash increases, and a 'Greenshoe Liability' is recorded.
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