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A Review of IPO Activity, Pricing and Allocations

  • Jay Ritter
  • Ivo Welch

We review the theory and evidence on IPO activity: why firms go public, why they reward first-day investors with considerable underpricing, and how IPOs perform in the long run. Our perspective on the literature is three-fold: First, we believe that many IPO phenomena are not stationary. Second, we believe research into share allocation issues is the most promising area of research in IPOs at the moment. Third, we argue that asymmetric information is not the primary driver of many IPO phenomena. Instead, we believe future progress in the literature will come from non-rational and agency conflict explanations. We describe some promising such alternatives.

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File URL: http://icfpub.som.yale.edu/publications/2356
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Paper provided by Yale School of Management in its series Yale School of Management Working Papers with number ysm258.

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Date of creation: 01 Jan 2002
Date of revision: 01 Apr 2002
Handle: RePEc:ysm:somwrk:ysm258
Contact details of provider: Web page: http://icf.som.yale.edu/
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