The Initial Public Offering (IPO) marks one of the most important events of a company.
Basically the aim is to generate maximum proceeds by selling the company s shares to
investors. However the shares that are sold seem to be underpriced as the price significantly
soars on the first trading day. Since the very first detection of this phenomenon in the United
States in 1969 several subsequent studies have documented the existence of worldwide IPO
underpricing. This study focuses on IPO Underpricing in the European and United States Stock
Markets by outlining and discussing the following essential issues: What is underpricing in the
context of the IPO? Which motivations are there and how do they impact? Is there IPO
underpricing in the markets of Europe and the United States of America?
