Does customer concentration disclosure affect IPO pricing?

Xuan Peng, Xiongyuan Wang and Kam C. Chan

Finance Research Letters, 2019, vol. 28, issue C, 363-369

Abstract: We examine the impact of customer concentration (CC) on initial public offering (IPO) pricing using the mandatory requirement of customer information disclosure by the China Securities Regulatory Commission as an external shock. Our findings suggest that when a firm has a high CC, its IPO discount is low. We interpret that IPO investors perceive high CC as a positive outlook for the IPO firm and therefore accept a high offer price. Thus, the IPO discount is low. In contrast, when a firm has one or more important related-party customers, the IPO discount is large.

Keywords: IPO discount; Customer concentration; Disclosure (search for similar items in EconPapers)
Date: 2019
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Citations: View citations in EconPapers (9)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:28:y:2019:i:c:p:363-369

DOI: 10.1016/j.frl.2018.06.007

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