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A Review of IPO Activity, Pricing and Allocations

45 Pages Posted: 9 Jan 2002  

Ivo Welch

University of California, Los Angeles (UCLA); National Bureau of Economic Research (NBER)

Jay R. Ritter

University of Florida - Department of Finance, Insurance and Real Estate

Multiple version iconThere are 3 versions of this paper

Date Written: February 2002

Abstract

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.

Keywords: IPOs

JEL Classification: G24

Suggested Citation

Welch, Ivo and Ritter, Jay R., A Review of IPO Activity, Pricing and Allocations (February 2002). Yale ICF Working Paper No. 02-01. Available at SSRN: https://ssrn.com/abstract=296393 or http://dx.doi.org/10.2139/ssrn.296393

Ivo Welch (Contact Author)

University of California, Los Angeles (UCLA) ( email )

110 Westwood Plaza
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Los Angeles, CA 90095-1481
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310-825-2508 (Phone)

HOME PAGE: http://www.ivo-welch.info

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
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Jay R. Ritter

University of Florida - Department of Finance, Insurance and Real Estate ( email )

P.O. Box 117168
Gainesville, FL 32611
United States
(352) 846-2837 (Phone)
(352) 392-0301 (Fax)

HOME PAGE: http://bear.cba.ufl.edu/ritter

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