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\title{The IPO Problem}
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Literature has documented for a long time the existence of
abnormal first-day trading returns in initial public offerings
(IPOs). The difference between the offer price and the closing
price on the first trading day generally involves important price
gains that cannot be easily justified. Its understood that this
initial return is mostly money left on the table since the shares
could have been sold at a higher price and, therefore, raised more
funds for the same stake in the company. Given the size of the IPO
market, a lot of academic work has been devoted to study the
nature of this phenomenon.

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The problem we try to tackle is forecasting the initial return for
a set of IPOs using a set of independent variables identified by
means literature review. Most of them are related to the structure
of the IPO. Forecasting the initial return of IPOs is very
difficult since the specific set relevant variables is yet to be
identified. Additionally, the researcher faces the supplementary
challenge of dealing with the rather random nature of the target
variable that is common in empirical finance.

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