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From 1999 to 2014, the average IPO rose by 19% in its first day of trading. In 1999, 117 deals doubled in price on the
From 1999 to 2014, the average IPO rose by 19% in its first day of trading. In 1999, 117 deals doubled in price on the first day. What factors might contribute to the huge first-day returns on IPOs? Some critics of the current IPO system claim that under-writers may knowingly underprice an issue. Why might they do this? Why might issue companies accept lower IPO prices? What impact do institutional investors have on IPO pricing?
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