Average first-day returns for IPOs have been negative each year since 1980, because investment banks usually sell at a slightly higher price to compensate for risks from underwriting the issues.

Question

Quizplus · Accepted Answer

Average first-day returns for IPOs have been positive in some years since 1980. Additionally, investment banks aim to price the IPOs accurately to generate demand and avoid negative first-day returns.

Average First-Day Returns for IPOs Have Been Negative Each Year