UCL School of Management

Research seminar

IPO Underpricing from the Perspective of the Issuing Firm: Money left on the table or Strategic Action


Markus Fitza, Texas A&M University


Friday, 12 December 2014
11:00 – 12:30
G21a Senate House, Malet Street, WC1E 7HU

Why are initial public offerings (IPOs) underpriced? I argue that firms can have strategic reasons to underprice. Most importantly because the first trading day share price increase that is the result of underpricing increases firm legitimacy by enhancing the public recognition of a firm. This increased legitimacy and public recognition can be used to attract critical stakeholders such as skilled workers and customers. I show that firms strategically choose their underwriter to decrease underpricing. Firms that benefit from underpricing will choose low reputation under-writers which in turn will results in higher underpricing.

Open to
Executive Education: Project Management
All students
Last updated Thursday, 11 December 2014