EconPapers    
Economics at your fingertips  
 

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

Christian Hopp and Axel Dreher ()

No 07-172, KOF Working papers from KOF Swiss Economic Institute, ETH Zurich

Abstract: We empirically analyze the determinants of Initial Public Offering (IPO) underpricing using panel data for 29 countries over the period 1988-2005. Our hypotheses stress the importance of institutional and legal factors in explaining cross-country variations. We find that increased protection of shareholders and greater accounting transparency contribute negatively to variations in underpricing. When more information is available price discovery is facilitated, allowing for more effective corporate governance. Moreover, when equity markets perform well, investors anticipate companies and investment banks to time the market and require higher underpricing in return. Overall, we conclude that better investor protection and better institutional environments reduce the perceived risk of investing, and attenuate the problem of asymmetric information, thereby causing lower underpricing across countries.

Keywords: IPO underpricing; Institutions; Legal infrastructure; Panel data (search for similar items in EconPapers)
Pages: 54 pages
Date: 2007-08
New Economics Papers: this item is included in nep-reg
References: Add references at CitEc
Citations: View citations in EconPapers (1) Track citations by RSS feed

Downloads: (external link)
http://dx.doi.org/10.3929/ethz-a-005430983 (application/pdf)

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? (2011) Downloads
Working Paper: Do Differences in Institutional and Legal Environments Explain Cross-Country Variations in IPO Underpricing? (2007) Downloads
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:kof:wpskof:07-172

Access Statistics for this paper

More papers in KOF Working papers from KOF Swiss Economic Institute, ETH Zurich Contact information at EDIRC.
Bibliographic data for series maintained by ().

 
Page updated 2022-01-15
Handle: RePEc:kof:wpskof:07-172