Media coverage and IPO pricing around the world

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Chen, Yangyang
Goyal, Abhinav
Veeraraghavan, Madhu
Zolotoy, Leon
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Cambridge University Press
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We study how media coverage impacts pricing of initial public offerings (IPOs) around the world. Higher media coverage in the pre-IPO period leads to lower IPO initial returns. The effect is mitigated in countries with better financial reporting quality, greater shareholder rights protection, and more stringent media censorship, and for IPOs “certified” by reputable intermediaries, while it is amplified in countries with higher levels of media penetration and media trust. Further, IPOs with higher pre-IPO media coverage have lower ex post price revision volatility. Our findings suggest that higher pre-IPO media coverage reduces information asymmetry among investors, leading to less underpriced IPOs.
Media coverage , IPO pricing , Information asymmetry
Chen, Y., Goyal, A., Veeraraghavan, M. and Zolotoy, L. (2019) 'Media Coverage and IPO Pricing around the World', Journal of Financial and Quantitative Analysis, pp. 1-39. doi: 10.1017/S0022109019000486
© Michael G. Foster School of Business, University of Washington 2019. Published by Cambridge University Press. This article has been published in a revised form in Journal of Financial and Quantitative Analysis This version is free to view and download for private research and study only. Not for re-distribution, re-sale or use in derivative works.