Not all black and white

Researchers Michelle Lowry of Smeal College of Business, Penn State University, and G William Schwert of Simon School of Business, University of Rochester, have tried to analyse the biases in the way prices for new initial public offerings (IPOs) are set. They found that companies and bankers do not try to incorporate all the information available to them when setting a price range for an IPO. The research revealed that firms often update the offer price of the IPO based on market returns in recent months.

Title: Biases in the IPO Pricing Process.

Source: The National Bureau of Economic Research