The Impact of Third-Party Certification on Italian Initial Public Offerings

46 Pages Posted: 5 Mar 2015

See all articles by Francesca Scribano

Francesca Scribano

University of Catania - Faculty of Economics

Date Written: February 2015

Abstract

Firms undergoing an IPO can use third-party certification to reduce information asymmetries and uncertainty. In this paper, we identify private equity firms, underwriting banks and auditors as third-party certifiers. Previous literature has shown that venture capital backing and the association with prestigious venture capitalists, underwriters and auditors are important signals of the quality of a firm at IPO. We test the certification hypothesis on the Italian market and provide evidence to the contrary: private equity-backed firms and firms backed by more reputable private equity firms and underwriters are not better off than others. Only association with Big-Four auditors helps issuing firms in reducing underpricing and wealth loss for pre-existing shareholders when going public.

Keywords: certification, signaling theory, initial public offerings

Suggested Citation

Scribano, Francesca, The Impact of Third-Party Certification on Italian Initial Public Offerings (February 2015). Available at SSRN: https://ssrn.com/abstract=2571247 or http://dx.doi.org/10.2139/ssrn.2571247

Francesca Scribano (Contact Author)

University of Catania - Faculty of Economics ( email )

Catania, 55
Italy

Register to save articles to
your library

Register

Paper statistics

Downloads
59
rank
346,980
Abstract Views
247
PlumX Metrics