Market manipulation rules and IPO underpricing

Huu Nhan Duong; Abhinav Goyal; Vasileios Kallinterakis; Madhu Veeraraghavan

doi:10.1016/j.jcorpfin.2020.101846

Market manipulation rules and IPO underpricing

Huu Nhan Duong^*
, Abhinav Goyal
, Vasileios Kallinterakis
, Madhu Veeraraghavan

^*Corresponding author for this work

T A Pai Management Institute, Manipal

Research output: Contribution to journal › Article › peer-review

25 Citations (Scopus)

Abstract

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.

Original language	English
Article number	101846
Journal	Journal of Corporate Finance
Volume	67
DOIs	https://doi.org/10.1016/j.jcorpfin.2020.101846
Publication status	Published - 04-2021

All Science Journal Classification (ASJC) codes

Business and International Management
Finance
Economics and Econometrics
Strategy and Management

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10.1016/j.jcorpfin.2020.101846

Cite this

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abstract = "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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note = "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: {\textcopyright} 2020 Elsevier B.V.",

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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.

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Market manipulation rules and IPO underpricing

Abstract

All Science Journal Classification (ASJC) codes

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