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...

The signaling hypothesis suggests that firms have incentives to underprice their initial public offerings (IPOs) to signal their quality to the outside investors and to issue seasoned equity (SEO) at more favorable terms. While the initial empirical evidence on the signaling hypothesis was weak,...

This article jointly examines the differences of laboratory versions of the Dutch clock open auction, a sealed-bid auction to represent book building, and a two-stage sealed bid auction to proxy for the “competitive IPO”, a recent innovation used in a few European equity initial public...

The exit process in venture capital (VC) financing is important to understand since many venture capital firms provide funding to initial public offerings (IPOs) for only a limited amount of time.The decision to disinvest is based on a variety of factors, which are explored here.An explanation...

Suggests a model to explain underpricing at the IPO by high-quality firms as a signal to investors at the expense of low-quality firms. In contrast to Rock's (1986) equilibrium model suggesting firms underprice reluctantly, this model follows in the vein of more recent models (Nanda 1989 and...

This study develops an empirical algorithm within which the incentive for signaling of private information in course of IPOs is implemented as a conditional, as opposed to an unconditional incentive. Suppose high quality issuers of IPOs signal private information, and suppose presence of cohorts...

We study the listing day opening price return and compare it with the closing price return for ChiNext IPOs after the China Securities Regulatory Commission (CSRC) adopted a new "Chinese-style" bookbuilding process. We start from a traditional OLS model by screening a set of potential variables,...

Let IPO volume simply be denoted `volume'. This study finds low and high volume regimes within stock markets are, respectively characterized by low or high valuation uncertainty risk, with outcome underpricing is higher yet more disparate in context of high volume regimes. This finding questions...

This paper examines the role of multiple lead underwriters (MLUs) in pricing initial public offerings (IPOs) by considering certification and market power hypotheses. Consistent with the notion that MLUs provide certification to the issue, we find that IPOs backed by MLUs price the offer closer...