On the day an IPO comes out, the market price can rise above the following price of
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On the day an IPO comes out, the market price can rise above the following price of fall bellow that price. Is it more common for the market price to close above the offering price on the day of an IPO? If a company’s market price rises above the IPO price, does that suggest that the company left money on the table and thus received less for its shares than it should have received? If most companies do leave money on the table, does that indicate the IPO market is inefficient? How might systematic under pricing be explained? Has the amount of underpricing been constant over time? Explain.
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In the late 1990s it was common for IPO stocks to rise far above the offering price on the first day of trading This situation indicated that companies were leaving money on the table ie that they cou...View the full answer
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