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A note on the pricing of IPOs

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  • Lundtofte, Frederik

Abstract

This paper studies the pricing of IPOs in a tractable model in which an investment bank faces some investors with superior information. We show how this can lead to underpricing and we make a number of empirical predictions.

Suggested Citation

  • Lundtofte, Frederik, 2010. "A note on the pricing of IPOs," Economics Letters, Elsevier, vol. 106(2), pages 105-107, February.
    • Handle: RePEc:eee:ecolet:v:106:y:2010:i:2:p:105-107
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    References listed on IDEAS

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    1. Laffont, Jean-Jacques & Maskin, Eric, 1987. "Monopoly with asymmetric information about quality : Behavior and regulation," European Economic Review, Elsevier, vol. 31(1-2), pages 483-489.
    2. Rock, Kevin, 1986. "Why new issues are underpriced," Journal of Financial Economics, Elsevier, vol. 15(1-2), pages 187-212.
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