The effect of size offering and leverage on IPO underpricing

Maxime Gauvin and Gabriel Power

International Journal of Managerial and Financial Accounting, 2019, vol. 11, issue 3/4, 222-237

Abstract: IPO underpricing is a well-documented stylised fact in financial markets. Although many explanations have been considered, the role of size offering is under-studied. This paper investigates US IPO underpricing in a setting that allows for size offering, leverage, and Fama-French risk factors. We find that, across specifications, size offering is economically and statistically significant. IPO underpricing is decreasing in the size offering, controlling for other variables. Implications for investors and firms are discussed and related to firm ex ante uncertainty.

Keywords: initial public offering; IPO; underpricing; abnormal return; size; offering; equity; debt; leverage; risk; asymmetric information. (search for similar items in EconPapers)
Date: 2019
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Persistent link: https://EconPapers.repec.org/RePEc:ids:injmfa:v:11:y:2019:i:3/4:p:222-237

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