Does pre‐deal research reduce IPO underpricing?

Kun Wang

Pacific Accounting Review, 2008, vol. 20, issue 3, 234-253

Abstract: Purpose - The purpose of this paper is to examine differences in underpricing for initial public offerings (IPOs) brought to market in Hong Kong, Singapore, and the United States. It intends to determine whether IPO pricing accuracy in Hong Kong is facilitated by the development and dissemination of pre‐deal research. Design/methodology/approach - The study examines a broad sample of initial public offerings made between 2000 and 2004. The author conducts univariate and multivariate tests to assess the relationship between IPO underpricing and the dissemination of pre‐deal research. Findings - The author finds that Hong Kong issues experience significantly less underpricing than issues listed in Singapore and the United States. The underpricing of Singapore IPOs, on average, is not significantly different from that of US new listings. Furthermore, the author finds underpricing experienced by Hong Kong issues after adoption of the 40‐day post‐IPO quiet period is significantly higher than underpricing in the pre‐regulation period. Research limitations/implications - The results may not be generalizable to different countries. They do, however, appear to be robust in the three markets throughout the five‐year sample period. Practical limitations/implications - To the extent that pre‐deal research can enhance IPO pricing accuracy, the overall finding should be useful to regulators in Hong Kong and Singapore as they continue to evaluate the extent to which pre‐deal research should be allowed and other IPO related policy making. Originality/value - The paper extends the IPO underpricing literature in a new direction and also documents a significant economic benefit to IPOs related to pre‐deal research.

Keywords: Research; Multivariate analysis; Singapore; Hong Kong; United States of America (search for similar items in EconPapers)
Date: 2008
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.emerald.com/insight/content/doi/10.110 ... d&utm_campaign=repec (text/html)
https://www.emerald.com/insight/content/doi/10.110 ... d&utm_campaign=repec (application/pdf)
Access to full text is restricted to subscribers

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eme:parpps:01140580810920227

DOI: 10.1108/01140580810920227

Access Statistics for this article

Pacific Accounting Review is currently edited by Professor Tom Scott, Dr Pei-Chi Kelly Hsiao, Associate Professor Chelsea Liu, Associate Professor Sophia Su, Associate Professor Thu Phuong Truong and Dr Lily Chen

More articles in Pacific Accounting Review from Emerald Group Publishing Limited
Bibliographic data for series maintained by Emerald Support (feeds@emerald.com).