A market microstructure explanation of IPOs underpricing

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.

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Year of publication:	2008
Authors:	Leoni, Patrick L.
Published in:	Economics Letters. - Elsevier, ISSN 0165-1765. - Vol. 100.2008, 1, p. 47-48
Publisher:	Elsevier

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Type of publication:	Article
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10005307352