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date: 25 February 2020

Abstract and Keywords

Valuation of initial public offerings (IPOs) occupies an important place in finance, perhaps because an IPO provides public capital market participants their first opportunity to value a set of corporate assets. Valuation of IPOs is also quite relevant from an economic efficiency perspective: the IPO is the first opportunity that managers of such (usually young) companies get to observe price signals from the public capital markets. Such signals can either affirm or repudiate management's beliefs regarding the firm's future growth opportunities, which have obvious implications for real economic activity (e.g., employment and corporate investment).

Keywords: initial public offerings, capital market participants, corporate assets, economic efficiency, firm growth

Rajesh Aggarwal

Rajesh Aggarwal is the U.S. Bancorp professor of financial markets and institutions at the University of Minnesota. He graduated from Yale University with a degree in economics and from Harvard University with a PhD in business economics. He has published in the Journal of Political Economy, Journal of Finance, and other top finance and economics journals. He is interested in corporate governance, executive compensation, IPOs, hedge funds, and stock market manipulation.

Sanjai Bhagat

Sanjai Bhagat is the provost professor of finance at the University of Colorado at Boulder. He has worked previously at the U.S. Securities and Exchange Commission, Princeton University, and University of Chicago. He has an MBA from the University of Rochester and a PhD from the University of Washington. He has published extensively in the leading finance and law academic journals (such as the Journal of Finance, Journal of Financial Economics, American Law and Economics Review, Columbia Law Review, and Journal of Corporation Law). Dr. Bhagat has advised the U.S. Securities and Exchange Commission, and the U.S. Department of Treasury on corporate governance reforms. He is a board member of Integra Ventures, a venture capital company, and of the National Association of Corporate Directors—Colorado Chapter. He is also a founding director of the TiE-Rockies (The Indus Entrepreneurs), a professional group serving technology entrepreneurs.

Srinivasan Rangan

Srinivasan Rangan is an associate professor of accounting at the Indian Institute of Management, Bangalore. He graduated from the University of Madras with a degree in commerce, and from the Wharton School of the University of Pennsylvania with a PhD in accounting. He has published in the Journal of Financial Economics, Journal of Accounting Research, The Accounting Review, and Review of Accounting Studies and Financial management, and is interested in initial public offerings, market efficiency, mergers and acquisitions, earnings management, and valuation. He is an associate member of the Indian Chartered Accountants Institute.

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