Market manipulation rules and IPO underpricing

Huu Nhan Duong, Abhinav Goyal (), Vasileios Kallinterakis and Madhu Veeraraghavan

Journal of Corporate Finance, 2021, vol. 67, issue C

Abstract: Using a large sample of 13,459 initial public offerings (IPOs) from 37 countries, we find that trading rules on market manipulation reduce IPO underpricing. The effect is weaker for IPOs certified by reputable intermediaries, in countries with greater shareholder rights protection, better financial reporting quality, and after the adoption of International Financial Reporting Standards. Better trading rules on market manipulation are also related to higher IPO proceeds, subscription-level, and trading volume, lower IPO listing fees, and better long-term post-IPO performance. Our findings are consistent with the notion that exchange trading rules mitigate information asymmetry problems for investors, resulting in lower IPO underpricing.

Keywords: Exchange trading rules; Market manipulation; IPO pricing; Information asymmetry (search for similar items in EconPapers)
JEL-codes: G10 G14 G15 G30 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:corfin:v:67:y:2021:i:c:s092911992030290x

DOI: 10.1016/j.jcorpfin.2020.101846

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