Arguments that have been presented to support IPO underpricing include diminishing the odds that investors will sue investment banks.

Question

Quizplus · Accepted Answer

One of the arguments for IPO underpricing is that it helps to reduce the likelihood of investors suing investment banks by creating an immediate upside for investors, thereby reducing their incentive to litigate over any perceived mispricing or misrepresentation at the time of the IPO.

Arguments That Have Been Presented to Support IPO Underpricing Include