For a large sample of initial public offerings of common stock, insider holdings are positively related to market value/book value ratios. Three hypotheses are presented to explain this relation: (i) insider holdings signal relative firm value, (ii) an agency relation is present, so that firms...

This paper develops and tests two propositions. We demonstrate that there is a monotone relation between the (expected) underpricing of an initial public offering and the uncertainty of investors regarding its value. We also argue that the resulting underpricing equilibrium is enforced by...

This paper develops and tests two propositions. We demonstrate that there is a monotone relation between the (expected) underpricing of an initial public offering and the uncertainty of investors regarding its value. We also argue that the resulting underpricing equilibrium is enforced by...