Do Regulatory Changes Affect the Underpricing of European IPOs?

54 Pages Posted: 5 Jun 2015

See all articles by Ali C. Akyol

Ali C. Akyol

University of Ottawa; University of Melbourne; Financial Research Network (FIRN)

Tommy Cooper

University of Alabama - Department of Economics, Finance and Legal Studies

Michele Meoli

University of Bergamo

Silvio Vismara

University of Bergamo

Date Written: March 24, 2014

Abstract

We use a sample of 3,677 European IPOs during the period 1998-2012 to examine how the adoptions of corporate governance codes by Member States of the European Union (EU) have affected IPO underpricing on Member State-regulated markets, where issuers are subject to corporate governance rules instituted by Member States, relative to a control sample of IPOs on exchange regulated markets, where issuers are exempt from Member State corporate governance codes. Using this control sample approach facilitated by the existence of second-tier, exchange regulated markets in the EU, we find that, on average, IPO underpricing declined on Member State-regulated markets after Member States adopted corporate governance codes containing SOX-like provisions. We do not find a similar reduction in IPO underpricing on exchange-regulated markets. Our results are robust to alternative specifications, and our findings support the view that elevating corporate governance standards increases transparency and reduces information asymmetries that affect IPO valuations.

Keywords: Initial public offerings, corporate governance, regulation, asymmetric information, underpricing

JEL Classification: G14, G15, G34, G38

Suggested Citation

Akyol, Ali C. and Cooper, Tommy and Meoli, Michele and Vismara, Silvio, Do Regulatory Changes Affect the Underpricing of European IPOs? (March 24, 2014). Journal of Banking and Finance, Vol. 45, No. 1, 2014, Available at SSRN: https://ssrn.com/abstract=2614284

Ali C. Akyol (Contact Author)

University of Ottawa ( email )

55 Laurier Ave E
Ottawa, Ontario K1N 6N5
Canada

HOME PAGE: http://www.aliakyol.com

University of Melbourne ( email )

198 Berkeley Street
Faculty of Economics and Commerce
Carlton VIC 3010, Victoria 3010
Australia
+61 (3) 8344-5318 (Phone)
+61 (3) 8344-6914 (Fax)

HOME PAGE: http://www.aliakyol.com

Financial Research Network (FIRN)

C/- University of Queensland Business School
St Lucia, 4071 Brisbane
Queensland
Australia

HOME PAGE: http://www.firn.org.au

Tommy Cooper

University of Alabama - Department of Economics, Finance and Legal Studies ( email )

P.O. Box 870244
Tuscaloosa, AL 35487
United States

Michele Meoli

University of Bergamo ( email )

Via Marconi 5
24044 Dalmine, Bergamo
Italy
+390352052026 (Phone)
+390352052077 (Fax)

Silvio Vismara

University of Bergamo ( email )

Via Marconi 5
24044 Dalmine, Bergamo
Italy
00390352052352 (Phone)
0039035562779 (Fax)

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
118
Abstract Views
2,097
rank
259,937
PlumX Metrics