Abstract
This paper analyzes underpricing in Initial Coin Offerings (ICO). It bridges the gap between findings in Initial Public Offerings (IPO) literature and empirical results from ICOs. The sample set consists of 279 ICOs between April 2013 and January 2018. The results show an average level of underpricing of 102% and a median of 26%. This is significantly higher than IPO underpricing. The level of underpricing can partially be explained by information asymmetry related proxies, like trading volume, issue size, and market sentiment. Therefore, I conclude proxies from IPO literature are usable to explain the level of ICO underpricing. Furthermore, the existence of a pre-ICO has a significant relationship to underpricing.
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