Journal of Financial Intermediation Vol. 61 2025
Loan market benefits of (High) IPO underpricing
open access
Abstract
We provide novel evidence on the loan market benefits of high IPO underpricing. We show that greater underpricing is associated with a significantly larger within-firm reduction of post-IPO borrowing costs. This benefit of underpricing is less pronounced for firms with high ex-ante information asymmetry and is concentrated in firms with a high demand for advertisements. In addition, neither price revision before the IPO nor the short-term or long-term stock return after the IPO has a similar effect. Our results suggest that underpricing affects borrowing costs through an attention channel and highlight a real economic effect of underpricing from the loan market.
- DOI
- 10.1016/j.jfi.2024.101132
- Volume
- 61
- Pages
- 101132
- Language
- en
- Sources
- bibtex:phds-export.bib openalex crossref