Improving the Viability of Going Public for the Small Firm

摘要

Prior research has indicated that there exists substantial underpricing in the market for initial public offerings (IPOs). The underpricing has been attributed to monopsonistic power possessed by underwriters, to information asymmetries, and to the use of underpricing as insurance against legal liability. The high cost of public offerings caused by underpricing is another indication of the inefficiency of public equity market faced by small business borrowers. The research develops an alternative hypothesis on the high price of IPOs during the early trading periods and provides empirical testing of the 'speculative bubble' hypothesis.