We study the role of underwriter compensation in mitigating conflicts of interest between companies going public and their investment bankers. Making the bank’s compensation more sensitive to the issuer’s valuation should reduce agency conflicts and thus underpricing. Consistent with this prediction, we show that contracting on higher commissions in U.K. IPOs leads to significantly lower underp...

This paper analyses the role of asymmetric information and moral hazard on IPO underpricing and lockups. I document that high information asymmetry is related to underpricing while the lockup length and lockup expiration return is related to moral hazard. Accordingly, lockup length and underpricing work as substitute signals. These results relate to the UK’s unique institutional settings: long ...

We analyze the impact of capacity constraints on IPO underpricing in the US property and liability (P&L) insurance industry. Our results show that insurer IPOs experience much less underpricing when insurers go public during capacity-constrained periods. Monte Carlo simulation shows that IPOs in other industries do not exhibit similar traits, suggesting our findings are specific to the P&L insu...

Paper studies the impact of the liquidity, underpricing and ownership up on both the short term and long term performance of the Initial Public Offer (IPO) stocks in the equity markets of India. Empirical analysis is undertaken to study the impact of liquidity, underpricing and ownership on Performance of IPO stocks. Multiple regression analysis is undertaken for analyzing the impact. It is fou...

This paper provides an empirical analysis of the pricing of initial public offerings (IPOs) of mining firms in Australia. Based on a sample of 130 mining IPOs issued during the period 1979 to 1990, the results show an average underpricing of 107.18%, significantly higher than that previously documented for industrial firms. An examination of the data shows that the delay between prospectus regi...

Underpricing is an IPO phenomenon in the capital markets and have been proven by researchers many countries. This study aims to determine effect of debt equity ratio, earnings per share, company age, return on assets underpricing listed Indonesia Stock Exchange 2015-2019 period. uses multiple linear regression analysis where as independent variables, dependent variable. a quantitative approach ...

We document evidence of corruption in Chinese state asset sales. These sales involved stakes in partially privatized firms, providing a benchmark—the price of publicly traded shares—to measure underpricing. Underpricing is correlated with deal attributes associated with misgovernance and corruption. Sales by “disguised” owners that misrepresent their state ownership to elude regulatory scrutiny...

Listing markets have different cultural backgrounds and experience economic development. This study examines the impact of values moderating effect growth on IPO underpricing issued by Chinese companies in stock markets. Using a sample 2429 IPOs issuing four for 2000–2018 period, results suggest that with higher power distance or longer-term orientation, underpricing; uncertainty avoidance scor...

This article analyses the impact of the participation of venture capital (VC) firms on underpricing in 372 businesses brought to IPO during the period 19992001 in KOSDAQ. Korea’s second-tier stock market, KOSDAQ, has grown dramatically since 1999 and about half of the firms listed in KOSDAQ during this period were VC-backed, thus providing a good testing ground for empirical analysis. We measur...

This paper presents an empirical analysis of whether independent and dependent private equity investors affect the underpricing of firms which went public on the Nouveau Marché and on the Neuer Markt between 1997 and 2000. In the sample of the Neuer Markt, the involvement of private equity investors reduces the underpricing of the firms' shares only if private equity investors sell a part of th...