Picking Up the IPO Money Left on the Table in Future SEO Rounds? Differential Pattern Across High- and Low-Quality Firms

This paper uses SEO data from 2001 to 2021 in a cross-country setup to show that the underpricing in each future SEO-round reduces, and this happens at a faster rate for high-quality firms. We posit that, firms, especially high-quality firms, tend to underprice their IPOs with an objective to recoup the lost proceeds in future SEO-rounds. We also find that various firm-level factors such as the time elapsed since the IPO, IPO-underpricing, ex-ante uncertainty, and relative offer-size of the SEO, affect this association between SEO-rounds and SEO-underpricing. Our results are robust and remain unaltered across a series of robustness tests