Underpricing and IPO ownership retention

Richard Robinson (), Mary Robinson () and Chien-Chih Peng ()

Journal of Economics and Finance, 2004, vol. 28, issue 1, 132-146

Abstract: An agency-theory model of IPO management retention is presented and empirically explored. The model is based upon the differences between the investment public’s and underwriters’ fears of the consequences of management entrenchment and other agency problems. The model suggests that IPO underpricing should be a curvilinear hump-shaped function of retention. A large-sample empirical exploration verifies the curvilinear relation. Copyright Academy of Economics and Finance 2004

Date: 2004
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DOI: 10.1007/BF02761460

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