Retail investor attention and IPO prices with a pre-IPO market

Lanfeng Kao, Anlin Chen and Cheng-Shou Lu

International Review of Economics & Finance, 2022, vol. 82, issue C, 416-432

Abstract: This study investigates whether retail investor attention influences initial public offering (IPO) subscription and prices in Taiwan's economy, which features little information asymmetry because of its pre-IPO market. We find that IPO trading prices in a pre-IPO market increase with investor attention before IPO filing date. Our results support attention theory and indicate that retail investors naïvely subscribe to IPOs that attract their attention, whereas underwriters employ pre-IPO market trading information rather than investor attention to price IPOs. The trading price in a premarket is more valuable than is retail investor attention for IPO pricing.

Keywords: Attention theory; Google search volume; Investor attention; IPO valuation; Pre-IPO market (search for similar items in EconPapers)
JEL-codes: G30 G32 (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:reveco:v:82:y:2022:i:c:p:416-432

DOI: 10.1016/j.iref.2022.07.007

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