This paper develops a signalling model with two signals, two attributes. It explains a puzzling 80th the fraction of the new issue retained by the issuer. The degree of underpricing is positively related to the firm's post-issue share price.
Original Description:
Original Title
Signaling and the Pricing of Unseasoned New Issues Grinblatt and Hwang 1989
This paper develops a signalling model with two signals, two attributes. It explains a puzzling 80th the fraction of the new issue retained by the issuer. The degree of underpricing is positively related to the firm's post-issue share price.
This paper develops a signalling model with two signals, two attributes. It explains a puzzling 80th the fraction of the new issue retained by the issuer. The degree of underpricing is positively related to the firm's post-issue share price.