A puzzling phenomenon in finance is the underpricing of new issues of common stock. A signaling model, with two signals, two attributes, and a continuum of signal levels and attribute types, is developed to explain this underpricing. The model has two signals: (1) the fraction of the new issue...

Predictable biases in analyst forecasts, both conservative and optimistic, distort share prices, but only for firms with hard-to-forecast earnings---those with extreme past returns, credit risk, idiosyncratic volatility, and other attributes linked to 14 popular anomalies. The prevalence of...