Journal of Financial Economics Vol. 14 No. 3 1985
Underpricing of seasoned issues
open access
Abstract
In this paper we provide a model of the underwritten offerings of new shares of seasoned securities. Our purpose is to explain why the offering price chosen by the underwriter is lower than the market price of the firm's shares. Our model recognizes the interdependence between the markets surrounding the announcement and sale of the new issue and recognizes as well the effect which asymmetric information regarding investor demands has upon the prices in these markets.
- DOI
- 10.1016/0304-405x(85)90005-4
- Volume
- 14
- Issue
- 3
- Pages
- 377-397
- Sources
- bibtex:phds-export.bib openalex crossref