Incentives to UnderpriceThis journal authored by Grame Camp, Aimee Comer and Janice CY How, is an in-depth analysis of stock pricing and is directly related to IPOs (initial public offerings) and frequency of undervaluation your shares do not initially decrease overall net worth and may in fact lead to a greater increase in wealth due to future economic benefits derived from shareholder support and confidence following the initial sale of shares at a loss. This theory is mainly supported by Rock (1986), Habib and Ljungqvist (2001) and Barry (1989) who have all published work on this topic. Underpricing of IPOs is a very common practice, with studies showing that underpricing ranges from 4.2 percent in France to over 80.3 percent in Malaysia. Underpricing is often described as “money left on the table,” implying that the issuer suffers a loss of wealth by trading the IPO shares at a discount. Ljungqvist suggests that the choices made by issuers during the IPO are strategic because they generate a wealth gain in the secondary market which confirms the wealth loss suffered by the offering. The theory supported by Ljungqvist is that “the higher direct issuance costs associated with an issuer's choice to build a book are offset by a lower level of underpricing. This in turn impacts wealth through the level of property retention. Focusing on increased trading volume in the immediate secondary market as a wealth benefit from the IPO, the results support the idea that choices made by issuers during the offering generate a compensatory advantage on the secondary market. Specifically, issuer choices that result in higher undervaluation and wealth loss also result in higher trading volume in the secondary market. new funds, this will lead to increased liquidity of their investments and diversification of their portfolio. It is for these gains that you can understand why the choices companies make when it comes to offering (in terms of pricing) can seem unfounded when considered on their own, but when considered in the multidimensional menu of options, they seem rational. It is therefore crucial to emphasize the need to consider the wealth of issuers in the perspective of all the choices they make, and not only with regard to an alternative such as the offer price and therefore undervaluation..