Geographic Dispersion and IPO Underpricing

Dimitrios Gounopoulos ()
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Dimitrios Gounopoulos: School of Management, University of Bath

A chapter in Essays on Financial Analytics, 2023, pp 207-241 from Springer

Abstract: Abstract This study provides empirical evidence that underpricing is larger for more geographically dispersed firms when using a measure that captures the number of states in which firms have economic interests. The findings show that the average underpricing for local firms is 4.85% less than for dispersed firms (firms that have economic interests in more than three states in the USA). The hypothesis that underpricing is larger for more geographically dispersed firms is confirmed, and the evidence is robust for alternative measures of geographic dispersion. Results reveal that the likelihood of a firm committing accounting fraud increases the more geographically dispersed a firm’s economic interests become.

Keywords: Geographical location; Home bias; IPOs; First-day returns; Underwriter reputation (search for similar items in EconPapers)
JEL-codes: G10 G14 G39 (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:spr:lnopch:978-3-031-29050-3_11

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DOI: 10.1007/978-3-031-29050-3_11

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