Digital Sentiment and the Retail Crowd: How Finfluencers Shape IPO Valuations

This study investigates how finfluencer endorsements affect initial public offering (IPO) pricing through behavioral attention mechanisms. Analyzing 395 Indian IPOs (2014–2024), we find that finfluencer-backed issues experience significantly higher traditional underpricing and initial returns, driven by salience, herding, and retail investor overreaction. Analyst recommendations yield more moderate effects, consistent with valuation-based anchoring. Robustness checks using Gaussian mixture model (GMM) and Bayesian bootstrapping confirm the causal role of social media engagement. Results reveal a hierarchy of influence, with macro-level finfluencers driving the strongest behavioral distortions. The study contributes to behavioral finance by identifying finfluencer sentiment as a novel attention-based pricing channel in contemporary capital markets.