TY - JOUR
T1 - Market manipulation rules and IPO underpricing
AU - Duong, Huu Nhan
AU - Goyal, Abhinav
AU - Kallinterakis, Vasileios
AU - Veeraraghavan, Madhu
N1 - Funding Information:
We are grateful for the useful comments by the two anonymous referees. Veeraraghavan thanks the T A Pai Chair Professorship for funding. We thank Savitha Heggede and Meghana Mohan for excellent research assistance. The usual disclaimer applies.
Publisher Copyright:
© 2020 Elsevier B.V.
PY - 2021/4
Y1 - 2021/4
N2 - Using a large sample of 13,459 initial public offerings (IPOs) from 37 countries, we find that trading rules on market manipulation reduce IPO underpricing. The effect is weaker for IPOs certified by reputable intermediaries, in countries with greater shareholder rights protection, better financial reporting quality, and after the adoption of International Financial Reporting Standards. Better trading rules on market manipulation are also related to higher IPO proceeds, subscription-level, and trading volume, lower IPO listing fees, and better long-term post-IPO performance. Our findings are consistent with the notion that exchange trading rules mitigate information asymmetry problems for investors, resulting in lower IPO underpricing.
AB - Using a large sample of 13,459 initial public offerings (IPOs) from 37 countries, we find that trading rules on market manipulation reduce IPO underpricing. The effect is weaker for IPOs certified by reputable intermediaries, in countries with greater shareholder rights protection, better financial reporting quality, and after the adoption of International Financial Reporting Standards. Better trading rules on market manipulation are also related to higher IPO proceeds, subscription-level, and trading volume, lower IPO listing fees, and better long-term post-IPO performance. Our findings are consistent with the notion that exchange trading rules mitigate information asymmetry problems for investors, resulting in lower IPO underpricing.
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U2 - 10.1016/j.jcorpfin.2020.101846
DO - 10.1016/j.jcorpfin.2020.101846
M3 - Article
AN - SCOPUS:85100075850
SN - 0929-1199
VL - 67
JO - Journal of Corporate Finance
JF - Journal of Corporate Finance
M1 - 101846
ER -