How do the primary motivations of the issuing firm and the investment banker compare in an IPO?
A) they are the same-maximizing the price of the firm
B) they are similar-completing the sale
C) they are very different because they are compensated for different outcomes
D) they are impossible to know,since every deal is structured differently

Question

Quizplus · Accepted Answer

The primary motivation of the issuing firm is to raise capital and become a publicly traded company, while the investment banker's primary motivation is to earn fees from underwriting the IPO. These motivations are different and may result in different outcomes. The investment banker is compensated based on the success of the IPO and may prioritize completing the sale over maximizing the price of the firm.

How Do the Primary Motivations of the Issuing Firm and the Investment