Investment banks are lowballing IPOs so badly that companies now have to hire a second set of 'watchdog' advisers just to keep an eye on them.
SSRN · March 17, 2026 · 6371378
The Takeaway
You would expect your underwriter to want the highest possible price for your stock, but banks often underprice shares to benefit their investor clients. This study shows that hiring an 'independent adviser' specifically to oversee the bank significantly reduces this underpricing, essentially proving that the banks we pay to sell our companies aren't always trying to get us the best deal.
From the abstract
<p>This paper examines how issuer-side governance influences price formation in initial public offerings (IPOs). While the IPO literature primarily focuses on underwriter incentives and investor information production, issuers increasingly introduce an additional intermediary into the process: independent IPO advisers who oversee underwriter selection, investor engagement and pricing strategy. Using a new dataset on adviser participation in global IPOs from 2010–2023 constructed from hand-collec