IPO underpricing based on the asymmetric information theories
This research draws conclusions about the European IPO market. The relative importance of asymmetric information theories that explain IPO underpricing are tested. Evidence is provided in favor of the changing issuer objective model. This model states that reputable underwriters have a positive impact on underpricing. The total number of underwriters has a negative effect on IPO underpricing, which is opposite to the expectation. When controlled for the endogeneity of the underwriters choice both results become insignificant. The results are compared with the American IPO market to explain the differences between the two markets.
Faculteit der Managementwetenschappen