Voluntary Information Disclosure at IPO

38 Pages Posted: 19 Jul 2016

See all articles by Laura Bottazzi

Laura Bottazzi

University of Bologna - Department of Economics; Bocconi University - IGIER - Innocenzo Gasparini Institute for Economic Research; University of Bologna - Rimini Center for Economic Analysis (RCEA)

Marco Da Rin

Tilburg University, Department of Finance; Tilburg Law and Economics Center (TILEC); European Corporate Governance Institute (ECGI)

Date Written: July 17, 2016

Abstract

Recent studies, starting with Hanley Weiss and Hoberg (2010), have used textual analysis to document that voluntary disclosure of information in IPO prospectuses is associated with lower IPO underpricing. We employ an alternative measure and model the issuer’s choice of information disclosure, documenting what factors lead to higher disclosure. We then find that the effect of disclosure on underpricing is asymmetric: firms that disclose more information enjoy lower underpricing, while firms that disclose less are not penalized by higher underpricing. Our measure allows us to account for the endogenous nature of information disclosure. We can therefore argue that the effect of disclosure on underpricing is causal.

Keywords: Underpricing, Voluntary Information Disclosure, Strategic Disclosure, Initial Public Offerings

JEL Classification: G18, G20, G24, G32

Suggested Citation

Bottazzi, Laura and Da Rin, Marco, Voluntary Information Disclosure at IPO (July 17, 2016). Available at SSRN: https://ssrn.com/abstract=2810847 or http://dx.doi.org/10.2139/ssrn.2810847

Laura Bottazzi

University of Bologna - Department of Economics

Strada Maggiore 45
Bologna, 40125
Italy

Bocconi University - IGIER - Innocenzo Gasparini Institute for Economic Research ( email )

Via Roentgen 1
Milan, 20136
Italy
+39 02 5836 3326 (Phone)
+39 02 5836 3302 (Fax)

HOME PAGE: http://www.igier.uni-bocconi.it/bottazzi

University of Bologna - Rimini Center for Economic Analysis (RCEA) ( email )

Via Patara, 3
Rimini (RN), RN 47900
Italy

Marco Da Rin (Contact Author)

Tilburg University, Department of Finance ( email )

P.O. Box 90153
Tilburg, 5000 LE
Netherlands

Tilburg Law and Economics Center (TILEC)

Warandelaan 2
Tilburg, 5000 LE
Netherlands

European Corporate Governance Institute (ECGI)

c/o ECARES ULB CP 114
B-1050 Brussels
Belgium

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