“WHAT’S WRONG WITH A PHENOMENON UNDERPRICING?”
The aims of this paper is to describe and explore the phenomenon of underpricing. Underpricing is the phenomenon of the low bid price and generally occurs during the initial public offering (IPO) and the seasoned equity offering (SEO) which the issuer using the underpricing as a "strategy". The phenomenon of underpricing caused due to asymmetry information between informed and uninformed investors which ultimately makes underpricing into a business strategy. Empirical studies indicates that the influence factors of the phenomenon of underpricing are underwriter reputation, auditor reputation, firm age, company size, larger board, board independence, the profitability of the company, and financial statements.
Keywords: underpricing phenomenon, IPO, SEO