Abstract
It is found that underpricing increases with the optimism expressed in the IPO prospectus. Underpricing is almost fully realized at the opening price, and, during the first day of trading, the market does not further update the listing firm’s value. In addition the share turnover on the first day of trading is found to be positively related to both prospectus sentiment and the pre-market return. If the prospectus is considered as public information the efficiency of the IPO process should be called into question.
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