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Do Differences in Institutional and Legal Environments Explain Cross-Country Variations in IPO Underpricing?

Christian Hopp () and Axel Dreher ()
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Christian Hopp: University of Vienna [Vienna]

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Abstract: We empirically analyze the determinants of Initial Public Offering (IPO) underpricing using panel data for 24 countries over the 1988 to 2005 period. Our hypotheses stress the importance of institutional and legal factors in explaining cross-country variations. We find evidence that underpricing is higher in countries with stronger protection of outside investors, suggesting that incumbent managers try to use underpricing as a tool to safeguard their private benefits of control when going public. Moreover, the results show that underpricing is reduced when stronger law enforcement and the availability of accounting information reduce the value of private benefits of control.

Keywords: Social; Sciences; &; Humanities (search for similar items in EconPapers)
Date: 2011-10-03
Note: View the original document on HAL open archive server: https://hal.archives-ouvertes.fr/hal-00737933
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Published in Applied Economics, Taylor & Francis (Routledge), 2011, 45 (04), pp.435-454. ⟨10.1080/00036846.2011.605760⟩

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Related works:
Journal Article: Do differences in institutional and legal environments explain cross-country variations in IPO underpricing? (2013) Downloads
Working Paper: Do Differences in Institutional and Legal Environments Explain Cross-Country Variations in IPO Underpricing? (2007) Downloads
Working Paper: Do Differences in Institutional and Legal Environments Explain Cross-Country Variations in IPO Underpricing? (2007) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-00737933

DOI: 10.1080/00036846.2011.605760

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