 Institutional investor inattention bias in auctioned IPOsYeguang Chi, Jingbin He, Xinru Ma and Fei Wu Journal of Banking & Finance, 2023, vol. 150, issue C Abstract: We investigate a unique dataset that includes detailed bidding information of 783 Chinese IPOs. First, we find that institutional investors who participate in multiple IPOs on a single day suffer from limited attention and submit less precise bids. Second, we form several proxies for investor attention capacity and show that investors with larger attention capacities are less affected by the inattention bias. Furthermore, we show that investors are more affected by the inattention bias in IPOs that are more difficult to price. Moreover, we find that the allocation rule change from pro-rata to lottery leads to a reduction in investors’ multiple participations, and improves their bidding precision. Third, we show that investors are more likely to submit lower bids when participating in multiple IPOs. Consequently, the investors affected by the inattention bias are allocated fewer shares and earn less profit. Finally, we find that aggregate investor inattention at the IPO level significantly reduces the IPO's pricing efficiency. Keywords: Initial public offerings (IPOs); Institutional investors; Limited attention; Market efficiency (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:jbfina:v:150:y:2023:i:c:s0378426623000560 DOI: 10.1016/j.jbankfin.2023.106831 Access Statistics for this article Journal of Banking & Finance is currently edited by Ike Mathur More articles in Journal of Banking & Finance from Elsevier |
Is your work missing from RePEc? Here is how to contribute.
Questions or problems? Check the EconPapers FAQ or send mail to .
EconPapers is hosted by the
School of Business at Örebro University.