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| Author: | Lowry, M. Schwert, G. W. |
| Title: | Is the IPO pricing process efficient? |
| Journal: | Journal of Financial Economics
2004 : JAN, VOL. 71:1, p. 3-26 |
| Index terms: | Information Initial public offerings Learning Market efficiency Pricing |
| Language: | eng |
| Abstract: | Underwriters' treatment of public information is investigated throughout the IPO pricing process. Two main resulsts are found: 1) Public information is not fully incorporated into the initial price range. While the economic magnitude of the bias is small, it is puzzling because it is not clear who benefits from it. Further, it indicates that the filing range midpoint is not an unbiased predictor of the offer price, as prior literature has assumed. 2) While public information is similarly not fully incorporated into the final offer price, the small economic significance of this indicates that the IPO pricing process is almost efficient. |
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