> banks are, therefore, incentivized to underprice IPOs as much as they can get away with.
But don't banks compete for the IPO business by telling the company what a high price they will list it for? That doesn't solve the problem of a bank saying they'll list for a high price, winning the bid, and then coming back later and saying that intervening events cause them to think it should be listed lower.
But presumably companies that are about to IPO have advisors/lawyers who can see these sorts of shenanigans coming and fight against them?
But don't banks compete for the IPO business by telling the company what a high price they will list it for? That doesn't solve the problem of a bank saying they'll list for a high price, winning the bid, and then coming back later and saying that intervening events cause them to think it should be listed lower.
But presumably companies that are about to IPO have advisors/lawyers who can see these sorts of shenanigans coming and fight against them?