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Effect of geographical distance between underwriters and listed companies on IPO underpricing: Evidence from China's A-share market

Feng Wang, Wei Chai, Bin Yan, Jing Shan and Wenna Fan

International Review of Economics & Finance, 2022, vol. 79, issue C, 340-352

Abstract: This study uses samples from China's A-share IPO between 2008 and 2018 to examine the relationship between geographical distance and IPO underpricing. We find that geographical distance between underwriters and the listed companies is significantly and negatively associated with the IPO underpricing, indicating that geographical proximity increases the IPO underpricing. We further find that reputation mechanism of underwriters needs further improvement while regulatory scrutiny could improve efficiency of capital market in China. This study further expands the research perspective on IPO underpricing.

Keywords: IPO underpricing; Underwriter; Geographical distance; Listed company (search for similar items in EconPapers)
JEL-codes: G10 G30 L20 (search for similar items in EconPapers)
Date: 2022
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DOI: 10.1016/j.iref.2022.02.060

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