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What factors can explain cross country variation in IPO underpricing? (Can you answer this question in...

What factors can explain cross country variation in IPO underpricing? (Can you answer this question in 2 different ways?)

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Answer #1

The factors which explain the cross country variation in IPO underpricing are the information asymmetry variances which might exist across various markets. Additionally, the variances in cost of block holding may also lead to variation in IPO underpricing.

Moreover also an effective legal system and a not so effective legal system can be the source of differences in the way an IPO is priced and could explain the IPO underpricing.

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