Societal secrecy and IPO underpricing

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

doi:10.1016/j.jcorpfin.2022.102257

Societal secrecy and IPO underpricing

Yangyang Chen, Andy C.W. Chui^*, Abhinav Goyal, Madhu Veeraraghavan

^*Corresponding author for this work

Finance

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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.

Original language	English
Article number	102257
Number of pages	21
Journal	Journal of Corporate Finance
Volume	76
Early online date	31 Jul 2022
DOIs	https://doi.org/10.1016/j.jcorpfin.2022.102257
Publication status	Published - Oct 2022

Bibliographical note

Funding Information:
We are grateful to an anonymous reviewer, Chuck Kwok, and Xuan Tian (the Editor) for helpful comments and suggestions. We thank Meghana Mohan for excellent research assistance. Veeraraghavan thanks the T A Pai Chair Professorship for funding support. Of course, we remain responsible for any remaining errors.

Publisher Copyright:
© 2022 Elsevier B.V.

Keywords

Cross-border investments
Culture
Initial public offerings
Societal secrecy

ASJC Scopus subject areas

Business and International Management
Finance
Economics and Econometrics
Strategy and Management

Access to Document

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ChenY2022SocietalAccepted author manuscript, 673 KBLicence: Creative Commons: Attribution-NonCommercial-NoDerivs (CC BY-NC-ND)

Cite this

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title = "Societal secrecy and IPO underpricing",

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.",

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N1 - Funding Information: We are grateful to an anonymous reviewer, Chuck Kwok, and Xuan Tian (the Editor) for helpful comments and suggestions. We thank Meghana Mohan for excellent research assistance. Veeraraghavan thanks the T A Pai Chair Professorship for funding support. Of course, we remain responsible for any remaining errors. Publisher Copyright: © 2022 Elsevier B.V.

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Societal secrecy and IPO underpricing

Abstract

Bibliographical note

Keywords

ASJC Scopus subject areas

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