Guo, Yang, Li, Lily Yuanzhi and Zhong, Hongda (2024) Bigger pie, bigger slice: liquidity, value gain, and underpricing in IPOs. Journal of Financial Markets. ISSN 1386-4181 (In Press)
Full text not available from this repository.Abstract
Since investor participation is essential for successful IPOs, we hypothesize that issuers share value gain from IPOs with IPO investors, resulting in IPO underpricing. We test the positive relation between value gain and underpricing from the liquidity angle, as improved liquidity via IPO increases firm value. We find supporting evidence that underpricing is positively related to the expected post-IPO liquidity of the issuer. Using two regulation changes as exogenous shocks to share liquidity before and after an IPO, we show that underpricing is more pronounced with better expected post-IPO liquidity or lower pre-IPO liquidity.
| Item Type: | Article |
|---|---|
| Additional Information: | © 2024 Elsevier B.V. |
| Divisions: | Finance |
| Subjects: | H Social Sciences > HG Finance |
| JEL classification: | G - Financial Economics > G3 - Corporate Finance and Governance > G32 - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure G - Financial Economics > G3 - Corporate Finance and Governance > G34 - Mergers; Acquisitions; Restructuring; Corporate Governance |
| Date Deposited: | 21 Nov 2024 13:00 |
| Last Modified: | 28 Nov 2024 17:03 |
| URI: | http://eprints.lse.ac.uk/id/eprint/126132 |
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