This paper examines the influence of the firm’s location on IPO underpricing using data from the Chinese stock market. We find that geographical proximity to major metropolitan areas reduces the magnitude of IPO underpricing: the distance between the firm and the major metropolitan areas is positively related to the market-adjusted first-day return of the IPO firm. Information opacity further magnifies the geographical effects. Furthermore, we find that China’s recent development of the national bullet train system mitigates the influence of geographical location on IPO underpricing. We apply an instrumental variable approach and a placebo test to address robustness issues.
Key words: distance; information costs; bullet train; IPO underpricing
JEL Classification: G10, G30
학회소식
[2016년 제 4차] Distance, Transportation and the Underpricing of IP
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게시일 :
2016-12-21
