Financial market development, market transparency, and IPO performance

Ying Sophie Huang, Mengyu Li and Carl R. Chen

Pacific-Basin Finance Journal, 2019, vol. 55, issue C, 63-81

Abstract: In a pseudo-multinational setting, we test IPO performance for firms in locations with differential financial market development under one regulatory umbrella, mitigating the difficulties arising from observable or unobservable between-country heterogeneity. We find evidence that firms located in better-developed financial markets experience less underpricing and better long-run performance due to higher market transparency and less information asymmetry. Furthermore, we find greater benefits of financial market development on IPO initial pricing for financially constrained firms. Regulatory reforms reduce underpricing and enhance the impact of financial market development on underpricing. Our results hold particularly well for non–state-owned private firms.

Keywords: Initial public offerings (IPOs); Financial market development; Market transparency (search for similar items in EconPapers)
JEL-codes: G30 (search for similar items in EconPapers)
Date: 2019
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Citations: View citations in EconPapers (6)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:pacfin:v:55:y:2019:i:c:p:63-81

DOI: 10.1016/j.pacfin.2019.03.007

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