Title: Underpricing effect in initial public offerings: explanations through information asymmetry

Authors: Gopal Acharya; Dushyant Mahadik

Addresses: School of Management, National Institute of Technology Rourkela, Sector-1, Rourkela, Odisha, 769008, India ' School of Management, National Institute of Technology Rourkela, Sector-1, Rourkela, Odisha, 769008, India

Abstract: This study synthesises the corpus of IPO underpricing literature published between 2000 and 2024 by adopting the Preferred Reporting Items for Systematic Reviews and Meta-Analysis (PRISMA) methodology and bibliometric analysis. The data for this study were collected from Scopus and the Web of Science database. The bibliometric analysis highlights essential aspects of existing literature, including leading journals, top-cited articles, research streams, variables, and other elements. Based on this review, it has been found that the 'information asymmetry' problem between the key IPO participants is the primary cause behind the high level of underpricing. However, it may not fully capture the complexity of investors' behaviour and IPO pricing. We suggest integrating behavioural finance theories into traditional information asymmetry models, which can provide more competing, complementary, or interactive explanations for the underpricing phenomenon.

Keywords: initial public offering; IPO; underpricing; systematic review; information asymmetry; signalling.

DOI: 10.1504/GBER.2026.155496

Global Business and Economics Review, 2026 Vol.35 No.2, pp.234 - 257

Received: 05 Apr 2024
Accepted: 11 Feb 2025
Published online: 04 Aug 2026 *

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