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http://hdl.handle.net/10397/77168
Title: | Economic freedom and IPO underpricing | Authors: | Chen, Y Wang, SS Tong, WHS Zhu, H |
Issue Date: | 2017 | Source: | Frontiers of business research in China, 2017, v. 11, 20, p. 1-22 | Abstract: | This paper examines how the difference in institutional environments constitutes differential IPO underpricing across countries. Using the Heritage Foundation’s Index of Economic Freedom (IEF) as a proxy for the heterogeneous institutional environment, and a sample of 3728 IPOs from 22 countries and regions over the period 1993–2014, we find that countries with higher economic freedom have significantly less serious IPO underpricing problems. Moreover, we find that among the 10 economic freedom factors covered by theIEF, financial freedom related factors play a more important role in reducing the IPO underpricing problem. Finally, consistent with the market sentiment hypothesis, we find strong evidence that pre-IPO market sentiment influences IPO first-day returns, and that the IPO underpricing problem is less severe when the market is bearish. | Keywords: | Economic freedom Institutional environment IPO underpricing |
Publisher: | Higher Education Press | Journal: | Frontiers of business research in China | ISSN: | 1673-7326 | EISSN: | 1673-7431 | DOI: | 10.1186/s11782-017-0019-1 | Rights: | © The Author(s). 2017 Open Access This article is distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution, and reproduction in any medium,provided you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license, andindicate if changes were made. The following publication Chen, Y., Wang, S. S., Tong, W. H. S., & Zhu, H. (2017). Economic freedom and IPO underpricing. Frontiers of Business Research in China, 11, 20, 1-22 is available at https://dx.doi.org/10.1186/s11782-017-0019-1 |
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