Underpricing

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Underpricing

Issuing securities at less than their market value.

Underpricing

Describing a situation in which a company prices an IPO lower than its market value. This results in the company raising less capital in the IPO than it could have raised. There is no definite way to determine if a stock issue is underpriced until it is too late and the price of the first secondary trade is much higher than the IPO.

underpricing

The pricing of a new security issue at less than the prevailing price of the same security in the secondary market. Underpricing helps ensure a successful sale.
References in periodicals archive ?
The industrial sector is currently the most attractively priced sector in the UK, with three of the top five most underpriced markets in DTZ's UK Fair Value Index all in this sector.
For example, IPO firms which select highly-reputed underwriters are more underpriced with a level of 17% the first listing week than others which select low-reputed underwriters.
She provides evidence that SEOs of low-priced securities are more underpriced than offers of high-priced securities.
Thus in line with the observed findings, investors should take caution while holding the highly underpriced stocks for more than one year after the issue.
Rock (1986), Tinic (1988), Hughes and Thakor (1992), and Welch (1992) suggest that IPOs could be purposefully underpriced by investment banks to avoid future legal liabilities.
Their results suggest that GOC IPOs are more underpriced than IPOs of privately owned companies in the U.
This leaves many perfectly worthy stocks underpriced and overlooked.
The association is responding to members' concerns over the recurrent pattern of underpriced imported OE items recently appearing on the U.
Manchester retail tops the list of individual markets, with property underpriced by 13.
Demand for SEO shares will also influence how deeply the offer is underpriced.