Abstract

http://ssrn.com/abstract=1396818
 
 

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IPO Underpricing, Disclosure, and Litigation Risk


James C. Spindler


University of Texas School of Law; McCombs School of Business, University of Texas at Austin

May 13, 2009

USC CLEO Research Paper No. C09-9
CELS 2009 4th Annual Conference on Empirical Legal Studies Paper
USC Law Legal Studies Paper No. 09-10

Abstract:     
I find that U.S. IPO prospectus disclosure exhibits significant correlation with first day underpricing, consistent with theories of underpricing as caused by informational asymmetry. In particular, a 1 standard deviation increase in positive prospectus disclosure is associated with almost a third reduction in first day underpricing. More disclosure also has a significant positive relation to measures of informational completeness. Further, I show that the amount of disclosure may derive from litigation risk. Controlling for measures of litigation risk, more disclosure exhibits a significant and positive relation to IPO litigation, while absent controls the relation is negative – suggesting that the amount of disclosure responds to ex ante perceived risk of litigation.

Number of Pages in PDF File: 39

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Date posted: April 29, 2009 ; Last revised: November 12, 2013

Suggested Citation

Spindler, James C., IPO Underpricing, Disclosure, and Litigation Risk (May 13, 2009). USC CLEO Research Paper No. C09-9; CELS 2009 4th Annual Conference on Empirical Legal Studies Paper; USC Law Legal Studies Paper No. 09-10. Available at SSRN: http://ssrn.com/abstract=1396818 or http://dx.doi.org/10.2139/ssrn.1396818

Contact Information

James C. Spindler (Contact Author)
University of Texas School of Law ( email )
727 East Dean Keeton Street
Austin, TX 78705
United States

McCombs School of Business, University of Texas at Austin ( email )
Austin, TX 78712
United States
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