Investing in Security Price Informativeness: The Role of IPO Underpricing

@inproceedings{Brown2016InvestingIS,
  title={Investing in Security Price Informativeness: The Role of IPO Underpricing},
  author={D. Clayton Brown},
  year={2016}
}
I develop a theory in which firms enhance the information content of their future stock prices by using underwriters to direct underpriced IPO allocations to information-producing investors. Sufficiently large allocations and the promise of future, profitable IPO participation provide incentives for investors to produce information after the IPO. Increasing underpricing strengthens these incentives, resulting in a more informative post-IPO price and higher firm value. Firms' desires for more… CONTINUE READING

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Endogenous Matching , Underwriter Reputation , and the Underpricing of Initial Public Offerings ∗

Oktay Akkus, J. Anthony Cookson, Ali Hortaçsu
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