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Why Do IPOs Leave Money on the Table for Investors on the First Day of Trading? A Theoretical Review

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dc.contributor.author Perera, K.L.W.
dc.date.accessioned 2017-02-20T05:37:49Z
dc.date.available 2017-02-20T05:37:49Z
dc.date.issued 2015
dc.identifier.citation Perera, K.L.W. (2015). Why Do IPOs Leave Money on the Table for Investors on the First Day of Trading? A Theoretical Review. International Journal of Accounting & Business Finance, 1(1), 25. en_US, si_LK
dc.identifier.issn 2448-9867
dc.identifier.uri http://dr.lib.sjp.ac.lk/handle/123456789/3979
dc.description.abstract To find out the possible theoretical reasons for leaving money on the table, this study reviews the literature on the short-run market performance of IPOs. Leaving money on the table is measured by the difference between the closing price on the first day of trading and the issue price, multiplied by the number of shares issued. The main cause for leaving money on the table is short-run underpricing which rewards positive financial returns for initial investors at the very first day of trading. The short run underpricing is a universally accepted phenomenon. The theoretical reasons for underpricing vary according to the markets, models and sample periods. The academic researchers have more emphasized on asymmetric information theories to explain the theoretical reasons for short-run underpricing phenomenon. The theoretical explanation also links with the uncertainty and the information asymmetry among the issuer, the underwriter and the investor. The issuer, underwriter (investment banker) and investor are major players in the IPO process. However, there is no single dominant theoretical reason for short-run underpricing. Further studies focus more on the behavioural finance approach to find out the real reasons for underpricing, which is complete dearth of literature on the short-run market performance of IPOs. en_US, si_LK
dc.language.iso en en_US, si_LK
dc.publisher University of Jaffna, Jaffna en_US, si_LK
dc.subject IPO en_US, si_LK
dc.subject Leaving money on the table en_US, si_LK
dc.subject Positive returns en_US, si_LK
dc.subject Asymmetric information theories en_US, si_LK
dc.title Why Do IPOs Leave Money on the Table for Investors on the First Day of Trading? A Theoretical Review en_US, si_LK
dc.type Article en_US, si_LK


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