How Does Better Access to Public Firm Disclosures Affect IPO Firm Financing?

Financial markets affect the economy in a fundamental way by facilitating the creation of capital. The market for initial public offerings (IPO) – also known as the “primary market” – is especially important because it allows fast-growing and innovative companies to raise the capital needed to pursue business opportunities, develop new technologies, and create jobs – all of which contribute to economic growth. A significant challenge for those companies is that the capital they raise is on average substantially less than what they are worth, a phenomenon known as underpricing. Studies show that underpricing reflects an information problem: Primary market … Read more