Why should a company try to price it’s public issue of shares as high as possible?
In fact, any company trying to price its public issue higher than its market price is being silly.  For that matter any company trying to price any of its products higher than the market price is being silly.  It should be obvious, that in such a case the investor (or the customer) will eject the offered share (or the product) outright, unless the higher price is qualitatively justified or he is ill informed.  True, there have been many instances following the free pricing policy where companies have priced their issues higher than the market price.  But these are errors of judgment, which a company soon comes to learn and learns to correct.  However, one important reason for the propensity of companies to price their shares unduly high may be attributed to their mistaken notion that the higher the price at which a company issues its Continue reading