Accelerated depreciation tax policy for fixed assets and IPO underpricing: Evidence from China

Jing Zeng, Gaoling Luo and Jun Wu

Finance Research Letters, 2025, vol. 78, issue C

Abstract: We use a difference-in-differences research design to study the impact of accelerated depreciation tax policy (ADTP) for fixed assets on IPO underpricing using a sample of China's A-share IPO firms from 2010 to 2019. The findings suggest that ADTP significantly reduces IPO underpricing. The channel tests show that ADTP reduces IPO underpricing by alleviating financial constraints and reducing a firm's risk level. The moderating analysis shows that the effect of ADTP on lowering IPO underpricing is more salient for firms with lower capital intensity, higher R&D investment, or non-state-owned. Overall, ADTP is helpful in capital formation.

Keywords: Accelerated depreciation tax policy for fixed assets; IPO underpricing; Financial constraints; Risk level (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:78:y:2025:i:c:s1544612325004106

DOI: 10.1016/j.frl.2025.107147

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