. On the day an IPO comes out, the market pricecan rise above the offering price or fall below thatprice. Is it more common for the market price toclose above or below the offering price on the dayof an IPO? If a company’s market price rises abovethe IPO price, does that suggest that the companyleft money on the table and thus received less for its shares than it should have received? If mostcompanies do leave money on the table, does thatindicate the IPO market is inefficient? How mightsystematic underpricing be explained? Has theamount of underpricing been constant over time?Explain.
. On the day an IPO comes out, the market pricecan rise above the offering price or fall below thatprice. Is it more common for the market price toclose above or below the offering price on the dayof an IPO? If a company’s market price rises abovethe IPO price, does that suggest that the companyleft money on the table and thus received less for its shares than it should have received? If mostcompanies do leave money on the table, does thatindicate the IPO market is inefficient? How mightsystematic underpricing be explained? Has theamount of underpricing been constant over time?Explain.
Chapter23: Corporate Restructuring
Section: Chapter Questions
Problem 8QTD
Related questions
Question
. On the day an IPO comes out, the market price
can rise above the offering price or fall below that
price. Is it more common for the market price to
close above or below the offering price on the day
of an IPO? If a company’s market price rises above
the IPO price, does that suggest that the company
left money on the table and thus received less for its shares than it should have received? If most
companies do leave money on the table, does that
indicate the IPO market is inefficient? How might
systematic underpricing be explained? Has the
amount of underpricing been constant over time?
Explain.
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