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Financial Literacy and IPO Underpricing
Resource type
Authors/contributors
- Jia, Xiaoran (Author)
- Kanagaretnam, Kiridaran (Author)
- Lim, Chee Yeow (Author)
- Lobo, Gerald J. (Author)
Title
Financial Literacy and IPO Underpricing
Abstract
Using an international sample of IPO firms and two country-level measures of financial literacy, we find strong evidence that financial literacy is negatively associated with IPO underpricing. In cross-sectional analyses, we find that the effect of financial literacy in reducing IPO underpricing is more pronounced when the information environment is less transparent. Employing path analysis, we document that information friction, firm transparency, and stock market participation are mechanisms that mediate this relationship. Our study contributes to and extends the literature by providing strong evidence that citizens’ financial literacy has an important and consistent influence on IPO underpricing.
Publication
Journal of Financial and Quantitative Analysis
Volume
59
Issue
3
Pages
1430-1469
Date
2024/05
Language
en
ISSN
0022-1090, 1756-6916
Accessed
6/17/24, 9:37 AM
Library Catalog
Cambridge University Press
Citation
Jia, X., Kanagaretnam, K., Lim, C. Y., & Lobo, G. J. (2024). Financial Literacy and IPO Underpricing. Journal of Financial and Quantitative Analysis, 59, 1430–1469.
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