Proximity and IPO underpricing

Ulf Nielsson and Dariusz Wójcik

Journal of Corporate Finance, 2016, vol. 38, issue C, 92-105

Abstract: This paper analyses the relationship between issuers' location and IPO underpricing in the U.S. from 1986 to 2014. Issuers headquartered in rural areas are associated with lower underpricing compared to urban firms. This finding is consistent with strong local bias in rural areas accompanied by superior local information, which associates with more accurate pricing and less money left on the table. The paper further finds that refined measures of local bias, such as proximity to finance professionals and density of financial expertise, correlate more with IPO underpricing than proximity to large cities.

Keywords: IPO underpricing; Proximity; Local bias (search for similar items in EconPapers)
JEL-codes: G10 G12 G30 (search for similar items in EconPapers)
Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (22)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:corfin:v:38:y:2016:i:c:p:92-105

DOI: 10.1016/j.jcorpfin.2016.03.012

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