45 Pages Posted: 9 Jan 2002
Date Written: February 2002
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.
JEL Classification: G24
Suggested Citation: 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