IPO underpricing positively correlates to analyst coverage after the IPO.
However, none of those studies examine the double-stage relation between underpricing and liquidity created by two subsequent effects: 1) underpricing generating greater analyst coverage and 2) the additional coverage triggered by underpricing improving liquidity and reducing information asymmetry in the secondary market.
The following two sections apply a signaling perspective to develop theory and hypotheses that link board ownership, underpricing, and liquidity.
Indeed, both retained director equity and underpricing have conventionally been considered to be important signals at the time of an IPO.
Ben slama et al (2011) and Kanoun and Taktak (2013) examine the relationship between underpricing
In the primitive stage, we assert that underpricing
is more likely to happen.
The empirical evidence posits that the IPO firms experience underpricing
in the short-run and over the long-run their performance deteriorates.
2004) where the focus was purely on underpricing
The offer price appears to be approximately set correctly for the time in which the stock went public due to the amount of underpricing
They attribute much of the higher underpricing
during the bubble period to a changing issuer objective function.
is higher for firms with elevated preoffer levels of cash, which is consistent with market timing predictions.
We report record levels of SEO underpricing
never measured before, particularly in the year 2009 when 270 SEOs had an average level of underpricing