Asymmetric Information relating to Initial Public Offering Underpricing

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Focusing on the motivations behind initial public offerings (IPOs), this essay highlights that companies primarily seek access to new funding. While the funds raised from share issues may not directly finance expansion, they serve crucial purposes such as facilitating acquisitions, supporting organizational growth, and refinancing existing debts. These factors are identified as significant considerations for newly listed companies as they navigate their financial strategies post-IPO.