Is The IPO Pricing Process Efficient?

Topics:
IPO
Tags:
Elsevier,
Finance,
Financial Planning,
Financial Services,
Investment,
IPO,
Offer Price
Source:
Elsevier

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Overview: This paper investigates underwriters' treatment of public information throughout the IPO (Initial Public Offering) pricing process. Two key findings emerge. First, public information is not fully incorporated into the initial price range. While the economic magnitude of the bias is small, it is puzzling because it is not clear who benefits from it. Further, it indicates that the filing rang e midpoint is not an unbiased predictor of the offer price, as prior literature has assumed. Second, while public information is similarly not fully incorporated into the final offer price, the small economic significance of this relation indicates that the IPO pricing process is almost efficient.

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Format: PDF | Size: 219KB | Date: Mar 2003 | Pages: 24

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