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2003) find that the positive correlation between initial underpricing and liquidity in the months following an IPO is formed through the creation of a broader ownership structure resulting from the allocation process.
Finally, this study adds to the underpricing literature at IPOs by highlighting a potential benefit of underpricing.
Baron (1982) argues that underpricing is explained by the asymmetric information between the issuer and the investment banker who is better informed than the issuer.
IPO underpricing is one of the most popular topics studied concerning.
Underpricing is also suggested to be the result of adverse selection or winner's curse to uninformed investors (Beatty and Ritter (1986), Rock (1986), Ritter (1997)).
Our results reveal that demutualization IPOs are underpriced and the magnitude of underpricing exceeds that of non-demutualization IPOs.
Although the Dutch Auction did allow small investors to buy shares in Google it did not eliminate the underpricing of Google.
They further argue that underwriters of the IPOs and investors assign different values to this signal information, and accordingly, the retention of equity by CEO is a potential contributing factor to the underpricing of securities that is so often seen with IPOs.
However, Leffall discovered he was underpricing his services.
Nagle said the dispute reflects a growing trend among reinsurers to stall and force renegotiation of contracts after obtaining the contract by underpricing the potential losses.
Alamo initially lured customers by underpricing competitors by as much as 20 percent and offering unlimited mileage.
46 times in 2005, falling within a comfortable margin to offset any short-term pressure on underpricing or increase in losses.