Which of the following is NOT a theory that has been suggested to explain empirical evidence that IPOs are initially underpriced?
A)litigation risk
B)the winner's curse
C)signaling (i.e., strategic underpricing)
D)the IPO market is inefficient

Question

Quizplus · Accepted Answer

The theories that have been suggested to explain the empirical evidence that IPOs are initially underpriced include litigation risk, the winner's curse, and signaling (i.e., strategic underpricing). The idea that the IPO market is inefficient is not typically offered as a theory to explain IPO underpricing. Instead, underpricing is often seen as a deliberate strategy for various reasons, such as attracting investors, mitigating litigation risk, or signaling company value, rather than a result of market inefficiency.

Which of the Following Is NOT a Theory That Has