Question
One of the theories regarding initial public offering (IPO) pricing is that the initial return (Initial) on an IPO depends on the price revision (Revision).
One of the theories regarding initial public offering (IPO) pricing is that the initial return (Initial) on an IPO depends on the price revision (Revision). Another factor that may influence the initial return is whether or not the firm is high-tech. The following table shows a portion of the data on 264 IPO firms.
| Initial | Revision | HighTech |
|---|---|---|
| 33.93 | 7.14 | No |
| 18.68 | 26.39 | No |
| 0.08 | 29.41 | Yes |
Click here for the Excel Data File Hint: You have to first convert the high-tech categorical variable (Yes/No) into a dummy variable (1/0). a-1. Estimate Initial = o + 1Revision + 2d + , where the dummy variable d equals 1 for firms that are high-tech and 0 otherwise. (Negative values should be indicated by a minus sign. Round your answers to 4 decimal places.)
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Financial Accounting
Authors: Robert Libby, Patricia Libby, Daniel Short, George Kanaan, M
5th Canadian edition
9781259105692, 978-1259103285
