Societal secrecy and IPO underpricing

Chen, Yangyang; Andy C.W. Chui, Andy C. W.; Goyal, Abhinav; Veeraraghavan, Madhu

Societal secrecy and IPO underpricing

cbnd

Files

IPO_and_Culture_version_before_acceptance_.pdf(513.04 KB)

Accepted Version

Date

2022-08-05

Authors

Chen, Yangyang

Andy C.W. Chui, Andy C. W.

Goyal, Abhinav

Veeraraghavan, Madhu

Publisher

Elsevier B.V.

Published Version

https://doi.org/10.1016/j.jcorpfin.2022.102257

Abstract

We examine how societal secrecy affects the underpricing of initial public offerings (IPOs). Using a large sample of 18,304 IPOs across 38 countries, we find robust evidence that IPO underpricing is positively related to societal secrecy. Additional analyses reveal that investor protection, market openness, and third-party certification moderate the effect of societal secrecy on IPO underpricing. We find that societal secrecy influences IPO underpricing through the information asymmetry, demand for control, and information cascade channels. Collectively, we show that societal secrecy exerts a strong influence on IPO underpricing globally.

Keywords

Initial public offerings , Cross-border investments , Societal secrecy , Culture

Citation

Chen, Y., Chui, A. C., Goyal, A. and Veeraraghavan, M. (2022) 'Societal secrecy and IPO underpricing', Journal of Corporate Finance, 76, 102257 (21pp). https://doi.org/10.1016/j.jcorpfin.2022.102257