Investor Awareness or Information Asymmetry? Wikipedia and IPO Underpricing
66 Pages Posted: 31 Jan 2017 Last revised: 21 Mar 2019
Date Written: March 13, 2019
We use the presence of a Wikipedia article for initial public offering (IPO) firms to test theories of information asymmetry and investor awareness. While we find limited support for the former, our results provide strong support for theories of investor awareness. Specifically, IPO firms with a Wikipedia article exhibit significantly higher underpricing than do IPO firms without a Wikipedia article. Investor awareness has positive long-term effects, including greater analyst following and institutional ownership for up to three years after the offering. The effect is robust to firm-specific Google search volume, news coverage, propensity score matching, and an instrumental variable approach.
Keywords: Initial Public Offerings, Investor Attention, Underpricing, Wikipedia
JEL Classification: D82, G14, G24, G32
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