Ljungqvist, Alexander P.; Nanda, Vikram; Singh, Rajdeep - C.E.P.R. Discussion Papers - 2001
Our model of the initial public offering process links the three main empirical IPO ‘anomalies’ – underpricing, hot … of having exuberant expectations regarding future performance. Underpricing and long-run underperformance emerge as … underwriters attempt to maximize profits from the sale of equity, at the expense of these exuberant investors. Underpricing serves …