IPO quantity revisions

During an IPO offering, issuers may revise both the offer price and quantity (number of shares). These revisions are of comparable magnitude and are nearly uncorrelated. We show theoretically that these two revisions should be interpreted differently. Shocks to growth options induce price and quantity to move together, whereas shocks to assets-in-place induce movements in opposing directions. Using public shocks that proxy for these two shocks, we find evidence of the predicted comovements. Post-IPO investment behavior is predicted by these revisions in a manner consistent with our model. Unexpected investment is positively associated with both price and quantity revisions, but only when the revisions are aligned. Viewed jointly, price and quantity revisions disentangle the nature of information received during the offering.