Societal secrecy and IPO underpricing

Yangyang Chen; Andy C. W. Chui; Abhinav Goyal; Madhu Veeraraghavan

doi:10.1016/j.jcorpfin.2022.102257

Journal of Corporate Finance Vol. 76 2022

Societal secrecy and IPO underpricing

Yangyang Chen¹; Andy C. W. Chui²; Abhinav Goyal³; Madhu Veeraraghavan⁴

¹ City University of Hong Kong · ² Hong Kong Polytechnic University · ³ University College Cork · ⁴ T A Pai Management Institute

open access

Abstract

We examine how societal secrecy affects the underpricing of initial public offerings (IPOs). Using a large sample of 18,304 IPOs across 38 countries, we find robust evidence that IPO underpricing is positively related to societal secrecy. Additional analyses reveal that investor protection, market openness, and third-party certification moderate the effect of societal secrecy on IPO underpricing. We find that societal secrecy influences IPO underpricing through the information asymmetry, demand for control, and information cascade channels. Collectively, we show that societal secrecy exerts a strong influence on IPO underpricing globally.

DOI: 10.1016/j.jcorpfin.2022.102257
Volume: 76
Pages: 102257
Language: en
Sources: bibtex:phds-export.bib openalex crossref

Societal secrecy and IPO underpricing

Abstract

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