UNDERPRICING OF IPOS THAT FOLLOW PRIVATE PLACEMENT

Underpricing of Privatised IPOs: The Australian Experience

We investigate the price performance of initial public o erings (IPOs) of formally state-owned companies in Australia. On average, privatised IPOs in Australia are underpriced by about 11%, which is not signi cantly di erent from the magnitude of underpricing of the privately-owned IPOs. This percentage is also similar to that of privatised share o erings in other OECD countries. In addition, c...

A market microstructure explanation of IPOs underpricing

In a typical IPO game with first-price auctions, we argue that risk-averse investors always underbid in equilibrium because of subjective interpretations of the firm’ communication about its actual value and resulting risk aversion about the likelihood of facing investors with higher valuations. We show that the noisier the investors’ inferences of the firm’ value (in the sense of first-order s...

An Empirical Investigation of Underpricing in Chinese IPOs

We study the underpricing of Chinese IPOs, using data of 308 flrm-commitment new issues. We flnd that underpricing can be explained in terms of a separating equilibrium under asymmetric information in which underpricing is a strategy for flrms to signal their value to investors. We show that bribery is an unlikely cause of the high IPO underpricing observed in the Chinese data. We also investig...

Audit Committee, Underpricing of Ipos and Accuracy of Management Earnings Forecasts

Underpricing of Venture and Non Venture Capital IPOs: An Empirical Investigation

In this paper we examine the premarket underpricing phenomenon within a group of venture-backed and a group of non venture-backed initial public offerings (IPOs) using a stochastic frontier approach. Consistent with previous research, we find that venture-backed IPOs are managed by more reputable underwriters and are generally associated with less underwriter compensation. However, unlike other...