A market microstructure explanation of IPOs underpricing

Patrick L. Leoni

Economics Letters, 2008, vol. 100, issue 1, pages 47-48

Abstract: In an IPO game with first-price auctions, we show that the noisier the inferences of risk-averse rational investors about the firm's value (in the sense of first-order stochastic dominance) the higher the underbidding. Underpricing occurs independently of winner's curse effects.

Downloads: (external link)
http://www.sciencedi ... 0769a5f2ae7701c4b17a
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Access Statistics for this article

Economics Letters is edited by E. Maskin

More articles in Economics Letters from Elsevier
Series data maintained by Heidi Boesdal ().