Asymmetric Information and IPO Size

Anton Miglo and Congsheng Wu

MPRA Paper from University Library of Munich, Germany

Abstract: We build a model of an IPO for firms with private information about their earnings profile over time and test the model’s predictions using a complete sample of newly listed Chinese companies between 1992 and 2007. The model predicts that IPO size is positively correlated with short-term operating performance that is not directly consistent with traditional theories. It also provides an explanation for negative correlation between debt and profitability that is not consistent with standard trade-off theory or signaling theory. The empirical results provide strong support for our model.

Keywords: Asymmetric information; Chinese IPOs; Offer size; Operating performance (search for similar items in EconPapers)
JEL-codes: C58 D82 G32 (search for similar items in EconPapers)
Date: 2014
New Economics Papers: this item is included in nep-cta
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:56550

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