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Conference Paper: Divergent Opinions in the Pre-Issue Market and the Pricing of Initial Public Offerings

TitleDivergent Opinions in the Pre-Issue Market and the Pricing of Initial Public Offerings
Authors
KeywordsInvestor opinions
Risk
IPOs
Underpricing
Issue Date2008
PublisherNational Sun Yat-Sen University.
Citation
The 16th Conference on the Theories and Practices of Securities and Financial Markets, Kaohsiung, Taiwan, December 2008. How to Cite?
AbstractInvestors in an initial public offering (IPO) face a lack-of-information problem: They have to guess the new stock’s aftermarket price. This problem poses a risk when there is no consensus in investors’ pre-issue opinions and the risk is greater when the opinions are more divergent. We model this lack-of-information problem in an IPO, where, to place a certain number of the shares, the issuer adjusts the offer price to accommodate the difference in demand between the pre-issue market and the aftermarket. By examining a large sample of IPOs, we obtain evidence in strong support of the model’s predictions for IPO underpricing and sales.
Persistent Identifierhttp://hdl.handle.net/10722/63824

 

DC FieldValueLanguage
dc.contributor.authorQi, Ren_HK
dc.contributor.authorZhou, Xen_HK
dc.date.accessioned2010-07-13T04:33:02Z-
dc.date.available2010-07-13T04:33:02Z-
dc.date.issued2008en_HK
dc.identifier.citationThe 16th Conference on the Theories and Practices of Securities and Financial Markets, Kaohsiung, Taiwan, December 2008.-
dc.identifier.urihttp://hdl.handle.net/10722/63824-
dc.description.abstractInvestors in an initial public offering (IPO) face a lack-of-information problem: They have to guess the new stock’s aftermarket price. This problem poses a risk when there is no consensus in investors’ pre-issue opinions and the risk is greater when the opinions are more divergent. We model this lack-of-information problem in an IPO, where, to place a certain number of the shares, the issuer adjusts the offer price to accommodate the difference in demand between the pre-issue market and the aftermarket. By examining a large sample of IPOs, we obtain evidence in strong support of the model’s predictions for IPO underpricing and sales.-
dc.languageengen_HK
dc.publisherNational Sun Yat-Sen University.-
dc.relation.ispartofTheories and Practices of Securities and Financial Markets Conference-
dc.rightsCreative Commons: Attribution 3.0 Hong Kong License-
dc.rightsCreative Commons: Attribution 3.0 Hong Kong License-
dc.subjectInvestor opinions-
dc.subjectRisk-
dc.subjectIPOs-
dc.subjectUnderpricing-
dc.titleDivergent Opinions in the Pre-Issue Market and the Pricing of Initial Public Offeringsen_HK
dc.typeConference_Paperen_HK
dc.identifier.emailZhou, X: xzhou@econ.hku.hken_HK
dc.identifier.authorityZhou, X=rp01129en_HK
dc.description.naturepublished_or_final_version-
dc.identifier.hkuros162333-
dc.publisher.placeTaiwan-

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