← Search

Journal of Financial and Quantitative Analysis Vol. 55 No. 5 2020

Media Coverage and IPO Pricing around the World

Yangyang Chen1,2,3,4,5,6; Abhinav Goyal1,2,3,4,6; Madhu Veeraraghavan1,2,3,4,7,6; Leon Zolotoy2,8,9,10,11,12,13

1 Central University of Finance and Economics · 2 Hong Kong Polytechnic University · 3 Lingnan University · 4 Beijing Technology and Business University · 5 Ten Chen Hospital · 6 Tsinghua University · 7 Ospedale Civile di Voghera · 8 University of Liverpool · 9 The University of Melbourne · 10 T A Pai Management Institute · 11 CRC for Spatial information · 12 Institute of Zoology of the Slovak Academy of Sciences · 13 University of Otago

open access

Abstract

We study how media coverage impacts pricing of initial public offerings (IPOs) around the world. Higher media coverage in the pre-IPO period leads to lower IPO initial returns. The effect is mitigated in countries with better financial reporting quality, greater shareholder rights protection, and more stringent media censorship, and for IPOs “certified” by reputable intermediaries, while it is amplified in countries with higher levels of media penetration and media trust. Further, IPOs with higher pre-IPO media coverage have lower ex post price revision volatility. Our findings suggest that higher pre-IPO media coverage reduces information asymmetry among investors, leading to less underpriced IPOs.

DOI
10.1017/s0022109019000486
Volume
55
Issue
5
Pages
1515-1553
Language
en
Sources
bibtex:phds-export.bib openalex crossref

Cite