City Research Online

Underpricing and Ex Post Value Uncertainty

Falconieri, S., Murphy, A. & Weaver, D. (2009). Underpricing and Ex Post Value Uncertainty. Financial Management, 38(2), pp. 285-300. doi: 10.1111/j.1755-053x.2009.01036.x


As documented by a vast empirical literature, initial public offerings (IPOs) are characterized by underpricing. A number of papers have shown that underpricing is directly related to the amount of ex ante uncertainty concerning the IPOs valuation. Recent theoretical papers propose that not all value uncertainty is resolved prior to the start oftrading, but rather continues to be resolved in the beginning ofthe after market. We term this type ofuncertainty as ex post value uncertainty and develop proxies for it. We find strong support for the existence ofex post value uncertainty and find that including a proxy for it more than doubles the explanatory power of previous models.

Publication Type: Article
Additional Information: This is the accepted version of the following article: Falconieri, S., Murphy, A. and Weaver, D. (2009), Underpricing and Ex Post Value Uncertainty. Financial Management, 38: 285–300., which has been published in final form at
Subjects: H Social Sciences > HG Finance
Departments: Bayes Business School > Finance
SWORD Depositor:
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