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IPOs and Venture Backed IPOs: A Theoretical and Practical Code of Practice plus Implication

IPOs and Venture Backed IPOs: A Theoretical and Practical Code of Practice plus Implication

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Описание
Over the last two decades, underpricing has been discussed extensively and the huge body of literature suggests that some major issues still remain unsolved. How can massive first-day mispricings continue, even if most involved parties know about the empirical (and reliable) fact of underpricing? Especially venture-backed initial public offerings (IPOs) show persistent underpricing. This book - based on a master's thesis - examines the very essential root of the problem by focusing on the mispricing problem from a theoretical standpoint. Author F. Philipp Ghadri takes several subsequent steps in order to address the fundamentals of this topic by applying models from game theory and related literature. After discussing IPO fundamentals and its signaling mechanisms, he explains how informational asymmetries determine sentiment through beliefs and thus create mispricing opportunities. Mispricing can arise even if all investors act completely rational. Even if informational asymmetry is weakened, mispricing can persist due to weak signals and noise traders. Additionally, Ghadri connects the dots between game-theoretical approaches and approaches from behavioristic theories. As a conclusion, he looks at IPO stocks as an asset class of its own, due to its unique characteristics. Master's Thesis.