The impact of internationalization on IPO underpricing: A result of agency costs reduction, a certification effect, or a diversification benefit?

Xuan Peng, Yibo Jia and Kam C. Chan

Finance Research Letters, 2022, vol. 44, issue C

Abstract: We examine the impact of internationalization on IPO underpricing in China. Our findings, which suggest that internationalization can reduce IPO underpricing, echo similar findings in the literature. However, we document that the transmission channel is not consistent with a diversification benefit documented in the literature. Instead, we find that internationalization: 1) serves as a good signal for investors and certifies the IPO is a quality investment due to lower information asymmetry; and 2) enhances corporate governance so that agency problems are less severe, thus leading to lower IPO underpricing. Overall, the underlying mechanisms differ between mature and emerging markets.

Keywords: IPO; internationalization; information asymmetry; agency costs (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S1544612321001409
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:44:y:2022:i:c:s1544612321001409

DOI: 10.1016/j.frl.2021.102059

Access Statistics for this article

Finance Research Letters is currently edited by R. Gençay

More articles in Finance Research Letters from Elsevier
Bibliographic data for series maintained by Catherine Liu ().