Investor Awareness or Information Asymmetry? Wikipedia and IPO Underpricing

63 Pages Posted: 31 Jan 2017 Last revised: 12 Oct 2018

See all articles by Thomas Jason Boulton

Thomas Jason Boulton

Miami University

Bill B. Francis

Rensselaer Polytechnic Institute (RPI) - Lally School of Management

Thomas Shohfi

Rensselaer Polytechnic Institute (RPI) - Department of Finance and Accounting

Daqi Xin

Rensselaer Polytechnic Institute (RPI) - Lally School of Management & Technology

Date Written: October 4, 2018

Abstract

We use the presence of a Wikipedia article at the time of a firm’s initial public offering (IPO) to test theories of information asymmetry and investor attention. While we find limited support for the former in that IPOs with a Wikipedia article are more likely to experience upward offer price revisions during the roadshow, we find much stronger support for investor awareness. Specifically, IPO firms with a Wikipedia article exhibit significantly higher underpricing in comparison to firms without a Wikipedia article despite the upward price revisions. Importantly, investor awareness has positive long-term effects, as IPO firms with a Wikipedia article benefit from greater analyst following and attract more institutional investors for up to three years following the offering. The Wikipedia-IPO 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

Suggested Citation

Boulton, Thomas Jason and Francis, Bill B. and Shohfi, Thomas and Xin, Daqi, Investor Awareness or Information Asymmetry? Wikipedia and IPO Underpricing (October 4, 2018). Available at SSRN: https://ssrn.com/abstract=2908624 or http://dx.doi.org/10.2139/ssrn.2908624

Thomas Jason Boulton

Miami University ( email )

3028 Farmer School of Business
Oxford, OH 45056
United States
(513) 529-1563 (Phone)
(513) 529-8598 (Fax)

Bill B. Francis

Rensselaer Polytechnic Institute (RPI) - Lally School of Management ( email )

Troy, NY 12180
United States

Thomas Shohfi (Contact Author)

Rensselaer Polytechnic Institute (RPI) - Department of Finance and Accounting ( email )

Pittsburgh Building
110 8th street
Troy, NY 12180
United States

HOME PAGE: http://shohfi.com/

Daqi Xin

Rensselaer Polytechnic Institute (RPI) - Lally School of Management & Technology ( email )

110 8th St
Troy, NY 12180
United States

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