American IPOs are priced after a process of bookbuilding, during which issuers can withdraw at any time. We hypothesize that the option to withdraw reduces underpricing by strengthening the issuers' bargaining power with respect to investors. Empirical analysis reveals that underpricing is lower...

Examines the use of price stabilization and penalty bid provisions in primary equity markets. The model created in this analysis is based on the assumption that an underwriter represents the firm, the firm is issuing a fixed claim on its future cash flows, and there are two distinct pools of...