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Undersubscribed

What is 'Undersubscribed'

A situation in which the demand for an initial public offering of securities is less than the number of shares issued. Also known as an "underbooking".

Explaining 'Undersubscribed'

Typically, the goal of a public offering is to price the security issue at the exact price at which all the issued shares can be sold to investors, so there will be neither a shortage nor a surplus of securities. If there is more demand for a public offering than there is supply (shortage), it means a higher price could have been charged and the issuer could have raised more capital. On the other hand, if the price is too high, not enough investors will subscribe to the issue and the underwriting company will be left with shares it either cannot sell or must sell at a reduced price, incurring a loss. Sometimes, when underwriters can't find enough investors to purchase IPO shares, they are forced to purchase the shares that could not be sold to the public (also known as "eating stock").


Further Reading


Share issue privatizations as financial means to political and economic ends
www.sciencedirect.com [PDF]
… Please enable JavaScript to use all the features on this page. Elsevier. Journal of Financial Economics. Volume 53, Issue 2, August 1999, Pages 217-253. Journal of Financial Economics. Share issue privatizations as financial means to political and economic ends☆ …

Behavioral finance in corporate governance: economics and ethics of the devil's advocateBehavioral finance in corporate governance: economics and ethics of the devil's advocate
link.springer.com [PDF]
… Please enable JavaScript to use all the features on this page. Elsevier. Journal of Financial Economics. Volume 53, Issue 2, August 1999, Pages 217-253. Journal of Financial Economics. Share issue privatizations as financial means to political and economic ends☆ …

Allocations, adverse selection, and cascades in IPOs: Evidence from the Tel Aviv Stock ExchangeAllocations, adverse selection, and cascades in IPOs: Evidence from the Tel Aviv Stock Exchange
www.sciencedirect.com [PDF]
… Please enable JavaScript to use all the features on this page. Elsevier. Journal of Financial Economics. Volume 53, Issue 2, August 1999, Pages 217-253. Journal of Financial Economics. Share issue privatizations as financial means to political and economic ends☆ …

Crisis and responses: the Federal Reserve in the early stages of the financial crisisCrisis and responses: the Federal Reserve in the early stages of the financial crisis
www.aeaweb.org [PDF]
… Please enable JavaScript to use all the features on this page. Elsevier. Journal of Financial Economics. Volume 53, Issue 2, August 1999, Pages 217-253. Journal of Financial Economics. Share issue privatizations as financial means to political and economic ends☆ …

Three essays on financial economicsThree essays on financial economics
lib.dr.iastate.edu [PDF]
… Please enable JavaScript to use all the features on this page. Elsevier. Journal of Financial Economics. Volume 53, Issue 2, August 1999, Pages 217-253. Journal of Financial Economics. Share issue privatizations as financial means to political and economic ends☆ …

Behavioral Finance in Corporate Governance-Independent Directors, Non-Executive Chairs, and the Importance of the Devil's AdvocateBehavioral Finance in Corporate Governance-Independent Directors, Non-Executive Chairs, and the Importance of the Devil's Advocate
www.nber.org [PDF]
… Please enable JavaScript to use all the features on this page. Elsevier. Journal of Financial Economics. Volume 53, Issue 2, August 1999, Pages 217-253. Journal of Financial Economics. Share issue privatizations as financial means to political and economic ends☆ …

Stock market efficiency and economic efficiency: is there a connection?Stock market efficiency and economic efficiency: is there a connection?
onlinelibrary.wiley.com [PDF]
… Please enable JavaScript to use all the features on this page. Elsevier. Journal of Financial Economics. Volume 53, Issue 2, August 1999, Pages 217-253. Journal of Financial Economics. Share issue privatizations as financial means to political and economic ends☆ …

On Balanced Protection of Creditors' Interest under Subscribed Registered Capital SystemOn Balanced Protection of Creditors' Interest under Subscribed Registered Capital System
en.cnki.com.cn [PDF]
… Please enable JavaScript to use all the features on this page. Elsevier. Journal of Financial Economics. Volume 53, Issue 2, August 1999, Pages 217-253. Journal of Financial Economics. Share issue privatizations as financial means to political and economic ends☆ …


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