Initial uncertainty about the value of IPOs combined with costs of over and underpricing make it risky to set fixed-offer prices. Assuming issuers seek to maximize proceeds net of the spread, we show it is optimal for book-building underwriters and best-efforts issuers to set the fixed-offer...

We model the risk of setting the required fixed-offer price in an IPO given initial uncertainty about value, as well as costs of over and underpricing. Assuming that the goal of issuers in bookbuilt IPOs is to maximize net offering proceeds, our analysis indicates that their optimal strategy is...

We model the risk of setting the required fixed-offer price in an IPO given initial uncertainty about value, as well as costs of over and underpricing. Assuming that the goal of issuers in bookbuilt IPOs is to maximize net offering proceeds, our analysis indicates that their optimal strategy is...