One of the characteristics of IPOs that puzzles experts is that they tend to be underpriced. What are the explanations for IPOs being underpriced?
Minimum 200 words please.© BrainMass Inc. brainmass.com September 22, 2018, 3:11 am ad1c9bdddf - https://brainmass.com/business/initial-public-offering/underpriced-ipos-512094
Although underpricing takes place all over the country, people still try to figure out the reasons for it. When explaining underpricing of IPOs, explanations fall under four categories: Information asymmetry, institutional reasons, control considerations, and behavioral approaches. The information asymmetry model classifies investors as either informed or uninformed. Informed ...
Explains some reasons for IPO's being underpriced.