An underwriter’s fee is generally based on a % of the gross proceeds, so there is a direct incentive for the underwriter, albeit a small one, to see the offering go off at a high price. Perhaps more important is the underwriter’s reputation—getting a relatively high price for the offering encourages future IB business.
“The efficient-market hypothesis may be the foremost piece of B.S. ever promulgated in any area of human knowledge!”
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