Skip to main content
Fig. 1 | Financial Innovation

Fig. 1

From: Heterogeneous expectations, IPO Underpricing and issuing mechanism

Fig. 1

Risk aversion coefficient’s influence on IPO underpricing comparing the two pricing mechanisms. We look at an example of a company IPO to analysis the risk and risk aversion coefficient’s influence on IPO underpricing under the different issuing mechanisms Under the same condition of investor heterogeneous expectations. The main data: n = 10, k = 0.65 , σ 2 2 = 2.5, Ē(U) = 12.6, V 2 = 14.5, V 1 = 11.46. We used Matlab to plot the relation between IPO underpricing and risk and risk aversion coefficient under different issuing mechanisms. According to the model (3) and model (6) in the paper. ρ [0, 4], σ 2 [0, 4]. UP1 is IPO underpricing under the fixed-price mechanism and UP2 is IPO underpricing under bookbuilding

Back to article page