Utilising a unique dataset of 502 UK IPOs we undertake an empirical analysis of the relationship between underpricing and value gains on flotation. We find support for our hypothesis that IPO underpricing is related to the extent of anticipated value gains on the private to public transition. We analyse alternative driving mechanisms behind this relationship, and our results suggest that the underpricing of IPOs is driven by both underwriters and issuing company directors, each of whom derive net benefits over the longer term from underpricing at the IPO.
|Translated title of the contribution||Value Gains on Flotation and IPO Underpricing|
|Pages (from-to)||1435 - 1459|
|Number of pages||25|
|Journal||Journal of Business Finance and Accounting|
|Publication status||Published - Nov 2006|