Incentives to UnderpriceThis journal written by Grame Camp, Aimee Comer and Janice CY How, is an in-depth analysis of stock prices and relates directly to IPOs (initial public offerings) and the frequency with at which your shares are initially underpriced do not decrease your overall net worth and in fact can lead to greater increases in wealth due to the future economic benefits gained 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 works on this topic. Underpricing of IPOs is a very common practice, studies show that underpricing ranges from 4.2 percent in France up to 80.3 percent in Malaysia. Underpricing is often described as “money left on the table,” with the implication that the issuer suffers a loss of wealth from trading the IPO shares at a lower price. Ljungqvist suggests that the choices issuers make at the IPO are strategic in that they generate an asset benefit in the aftermarket that ratifies the loss of wealth suffered by the offering. The theory supported by Ljungqvist is that “the higher direct issuance costs associated with an issuer's choice to book build 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 aftermarket as a capital benefit from the IPO, the results support the idea that the choices issuers make in the offering generate a compensating benefit in the aftermarket. Specifically, issuer choices that result in greater price undercutting and a loss of wealth also result in higher trading volume in the aftermarket. new funds, this will lead to greater liquidity in their investments and diversification in their portfolio. It is from these advantages that one can understand why the choices companies make in (under-priced) bidding may seem unfounded when considered alone, but when viewed within the multidimensional menu of options they seem rational. It is truly fundamental, therefore, to highlight the need to consider the wealth of the issuers in the perspective of all the choices they make, not only from the perspective of an alternative such as the offer price and, therefore, of underpricing.