Abstract:Our study investigates by which channels IPO underpricing impacts post-listing liquidity. Using a sample of IPOs undertaken on Euronext with diverse mechanisms, we show that when ownership structure is not influenced by initial underpricing, this underpricing still has a positive impact on aftermarket liquidity by a virtuous cycle related to analyst coverage.The analyst coverage purchased by initial underpricing reduces information asymmetry costs and illiquidity in the secondary market. The public information… Show more
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