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April 5, 2019 | 10:30 a.m. - 12:00 p.m.
Category: Lecture
Location: Business, Mike Ilitch School of #219 | Map
2771 Woodward
Detroit, MI 48201
Cost: Free

We examine whether underwriters price-up weakly-demanded IPOs to prevent withdrawal. Our empirical strategy exploits a discontinuity in the distribution of IPO prices around the low boundary of the filing range. Offerings with a high ex-ante withdrawal probability that are priced at this boundary are likely priced-up to meet issuers’ reservation prices. We compare the aftermarket returns of these IPOs to the returns of other weakly-demanded offerings where issuers’ reservation prices were likely not binding, and identify a negative 8.4-percentage point differential attributable to the aggressive pricing inherent in setting the price at the low boundary when withdrawal risk is high. 

For more information about this event, please contact Manoj Kulchania at 313-577-7837 or