The average underpricing of the first half of this group (low offer prices) is 4.21%, while the second half (high offer prices) has an average underpricing of 1.76%.
Similarly, the size of the issue measured by the natural logarithm of the offering's proceeds is also related with the offer price. Large issues usually have relatively high offer prices, and penny stocks commonly need to sell millions of shares to raise modest amounts of capital.
Corwing (2003) suggests that the rounded offer prices suggested by Lee et.
The most significant contribution of this article is the statistical evidence about a negative relationship between the offer price and SEO underpricing.
Among the firms in our sample, 1,591 SEOs set an offer price different from the last closing price before the SEO date and only 249 firms used such a closing price as the relevant value for the share of stock.
This paper provides statistical evidence about the negative relationship between offer price and SEO underpricing.
To the extent of our knowledge, the only previous articles that report a negative relationship between offer price and SE0 underpricing are Altinkilic and Hansen (2003) and Corwin (2003).
The lower the offer price, the higher the level of SEO underpricing.
The level of SEO underpricing (U[P.sub.1]) is measured by the 1-day holding period return for SEO i, as ([P.sub.1] - [P.sub.0])/[P.sub.0], where Po is the offer price and [P.sub.0], is the closing price of the day before the SEO date.
Ship sails: Los Angeles Cabo San Lucas Mazatlan Puerto Vallarta Los Angeles Reader offer prices from .
Ship sails Barcelona Florence/Pisa Rome Naples Palma Barcelona Reader offer prices from .
About 50 percent of the newly listed shares fetched opening quotes more than double their offer prices
, but many of these have since fallen from such highs, the report said, adding that in 2004, 165 of 175 IPO shares opened above their offer prices
while seven slipped on their debuts.