Investor sentiment and IPO pricing during pre-market and aftermarket periods: Evidence from Hong Kong

Li Jiang and Gao Li

Pacific-Basin Finance Journal, 2013, vol. 23, issue C, 65-82

Abstract: Using a sample of 293 IPOs in Hong Kong, we separately measure pre-market and aftermarket sentiments and examine their impact on IPO pricing in a two-stage framework. We find that underwriters only partially adjust offer price to reflect pre-market sentiment and money left on the table is positively related to the deterioration of investor sentiment in the aftermarket period. We also show that aftermarket sentiment causes a further price run-up in the secondary market. Overall, our findings suggest that institutional investors play an important role of re-distributing shares in the secondary market and underwriters take into consideration of investor sentiment in pricing IPOs during pre-market and aftermarket periods.

Keywords: Investor sentiment; IPO pricing; Institutional investors; Aftermarket trading (search for similar items in EconPapers)
JEL-codes: G02 G14 (search for similar items in EconPapers)
Date: 2013
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Citations: View citations in EconPapers (19)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:pacfin:v:23:y:2013:i:c:p:65-82

DOI: 10.1016/j.pacfin.2013.01.006

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