Does local corruption affect IPO underpricing? Evidence from China

Xin Wang and Di Song

International Review of Economics & Finance, 2021, vol. 73, issue C, 127-138

Abstract: This study investigates the impact of local corruption on IPO underpricing. We find that compared to firms located in regions with low corruption, firms located in regions with high corruption exhibit higher IPO underpricing. In cross-sectional analysis, we find that high-reputation underwriters and auditors can attenuate the positive relationship between local corruption and IPO underpricing. In addition, we find that the positive relationship between local corruption and IPO underpricing is confined to non-state owned firms. Our study contributes to the literature on the consequences of corruption and the determinants of IPO underpricing.

Keywords: Local corruption; Information transparency; Agency problem; IPO underpricing (search for similar items in EconPapers)
JEL-codes: G12 G14 (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (9)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:reveco:v:73:y:2021:i:c:p:127-138

DOI: 10.1016/j.iref.2021.01.007

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