The Evidence on IPO Sales Is Varied from Issue to Issue,but

question 73

Essay

The evidence on IPO sales is varied from issue to issue,but there are three common themes; underpricing,underperformance,and the reasons for going public. Explain these three themes.

---

Definitions:

Lockbox System

A service provided by banks to process payments quickly by allowing companies to have their customers send payments to a special post office box.

Disbursement Float

The time lag between when a payment is issued by a payer and when the funds are actually withdrawn from the payer's account.

Receivable Accounts

Balances of money due to a company for goods or services provided that have not yet been paid by customers.

Collection Time

The average period that a company takes to collect payments from its customers after a sale has been made, impacting cash flow and liquidity.