We treat information acquisition by potential investors in IPOs asendogenous. With endogenous information, the critical question iswhy underwriters would allow investors to spend resources acquiringsuperior information intended solely to effect a wealth transfer. Weshow that institutional...

We distinguish between discovery information and private foreknowledge in the valuation of initial public offerings of corporate securities. An underwriter gathers discovery information to value and price the issue. The issuing firm relies on this information to make the optimal investment...

We treat information acquisition by potential investors in initial public offerings as endogenous. With endogenous information, the critical question is why underwriters would allow investors to spend resources acquiring superior information intended solely to effect a wealth transfer. We show...