IPO UNDERPRICING AND INFORMATION QUALITY OF PROSPECTUSES

Kuo Zhou (), Baicheng Zhou and Huaxiao Liu ()
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Kuo Zhou: School of Economics, Jilin University, Changchun, P. R. China
Baicheng Zhou: School of Economics, Jilin University, Changchun, P. R. China†China Center for Public Sector Economy Research, Jilin University, P. R. China
Huaxiao Liu: #x2021;College of Computer Science and Technology, Jilin University, Changchun, P. R. China

The Singapore Economic Review (SER), 2020, vol. 65, issue 06, 1559-1577

Abstract: Effective information disclosure is the cornerstone of sustainable operation of the capital market. In the IPO market, whether public information in the prospectus can be fully captured by investors largely depends on the quality of valuation-relevant information. Based on Chinese prospectuses, we create five unique indicators to measure the information quality and examine the relationship between information quality and IPO underpricing. We find that high quality of information disclosure results in less underpricing because they relieve serious information asymmetry between issuing companies and investors. We provide a new method to supervise and improve the quality of non-financial information disclosure.

Keywords: Disclosure; information quality; prospectus; IPO (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (1)

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DOI: 10.1142/S0217590820500289

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