Conscientiousness and IPO first-day underpricing

Chen, Shirley (Shuo) and Chong Meng

Finance Research Letters, 2024, vol. 65, issue C

Abstract: We document that state-level conscientiousness is negatively associated with the initial public offering (IPO) first-day return. Exploring the economic mechanisms, we find that IPO firms originating in states that have a high level of conscientiousness experience longer IPO processes and hire more, but less reputable underwriters. Furthermore, issuers in highly conscientious states are less inclined to exchange IPO first-day return for coverage by all-star analysts. Our findings suggest that high conscientiousness stimulates issuers' negotiation incentives towards underwriters. These findings highlight state-level personality traits as a crucial determinant of IPO market pricing dynamics.

Keywords: Initial public offerings (IPOs); First-day return; Big five; Personality traits (search for similar items in EconPapers)
JEL-codes: D90 G14 G24 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:65:y:2024:i:c:s1544612324005804

DOI: 10.1016/j.frl.2024.105550

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