Governance reform and IPO underpricing

Governance, sentiment analysis, and initial public offering underpricing

“…9 A high dispersion in the distribution of terms is observed in natural language processing. 10 See, for example, Ritter (1984), Beatty and Welch (1996), Ljungqvist, Jenkinson, and Wilhelm (2003), Park, Borah, and Kotha (2017), Guldiken et al (2017), Bajo and Raimondo (2017), Benson et al (2015), Bertoni, Meoli, and Vismara (2014), Akyol et al (2014), Loughran and McDonald (2013), Ferris et al (2013), Ekkayokkaya and Pengniti (2012), and Liu and Ritter (2011). 11 Higher first-day returns imply more underpricing for the initial offer.…”

“…However, the effectiveness of legal reforms in reducing IPO underpricing seems to be affected by different factors. For example, Ekkayokkaya and Pengniti (2012) analyzed a major governance reform in Thailand, an economy with weak legal institutions (La Porta, Lopezde-Silanes, Shleifer, & Vishny, 1998), and found that, although IPOs are now less underpriced, the reform had limited efficacy in improving investor protection. Specifically, they found that insiders disclose less information while retaining absolute control despite the reform.…”

Collateral Regulation and IPO‐Specific Liberalisation: the Case of Price Limits in the Athens Stock Exchange

“…Since it is broadly felt that asymmetry of information lies at the root of underpricing, as Rock () originally argued, regulatory policies of mandatory disclosure are widely acknowledged. Beatty and Ritter (), Sherman and Titman (), Ekkayokkaya and Pegniti () exemplify arguments on how better information quality can lead to reduced underpricing. In line with these arguments the quality of disclosure standards must remain a major concern of regulators.…”

“…In a number of studies that address various aspects of national regulatory requirements across different Asian countries there are additional insights on the implications of institutional constraints for underpricing, such as Chen (1992) for Taiwan, Kao et al . () and Tian () for China, Ekkayokkaya and Pengniti () for Thailand and Chang et al . () for Korea.…”

“…The regulation of IPOs has a long history around the world and is linked to intrinsic informational asymmetries that surround new listings (Chan et al ., ; Chambers and Dimson, ; Carpentier et al ., ; Ekkayokkaya and Pegniti, ; Burhop et al ., ). Regulatory objectives regarding IPOs have sought the twin goals of financial regulation: efficient pricing and investor protection (IOSCO 2010).…”