Media Coverage and IPO Pricing Around the World

Journal of Financial and Quantitative Analysis (JFQA), Forthcoming

60 Pages Posted: 24 Oct 2017 Last revised: 18 Jan 2019

See all articles by Yangyang Chen

Yangyang Chen

Hong Kong Polytechnic University - Faculty of Business

Abhinav Goyal

University of Liverpool - Management School (ULMS)

Madhu Veeraraghavan

T.A. PAI Management Institute, Finance Area

Leon Zolotoy

University of Melbourne - Melbourne Business School

Date Written: January 17, 2019

Abstract

We study how media coverage impacts pricing of IPOs around the world. Higher media coverage in the pre-IPO period leads to lower IPO initial returns. The effect is mitigated in countries with better financial reporting quality, greater shareholder rights protection, and more stringent media censorship, and for IPOs “certified” by reputable intermediaries, while it is amplified in countries with higher levels of media penetration and media trust. Further, IPOs with higher pre-IPO media coverage have lower ex-post price revision volatility. Our findings suggest that higher pre-IPO media coverage reduces information asymmetry among investors, leading to less underpriced IPOs.

Keywords: Media coverage, IPO pricing, information asymmetry

JEL Classification: G10, G14, G15, G30

Suggested Citation

Chen, Yangyang and Goyal, Abhinav and Veeraraghavan, Madhu and Zolotoy, Leon, Media Coverage and IPO Pricing Around the World (January 17, 2019). Journal of Financial and Quantitative Analysis (JFQA), Forthcoming. Available at SSRN: https://ssrn.com/abstract=3057846 or http://dx.doi.org/10.2139/ssrn.3057846

Yangyang Chen (Contact Author)

Hong Kong Polytechnic University - Faculty of Business ( email )

9/F, Li Ka Shing Tower
The Hong Kong Polytechnic University
Hong Kong, Hung Hom, Kowloon M923
China

Abhinav Goyal

University of Liverpool - Management School (ULMS) ( email )

Chatham Street
Liverpool, L69 7ZH
United Kingdom
+44-151-795-2150 (Phone)

Madhu Veeraraghavan

T.A. PAI Management Institute, Finance Area ( email )

Bangalore
Manipal, Karnataka 576104
India
+91-820-2701030 (Phone)

Leon Zolotoy

University of Melbourne - Melbourne Business School ( email )

200 Leicester Street
Carlton, Victoria 3053 3186
Australia

Register to save articles to
your library

Register

Paper statistics

Downloads
219
rank
136,829
Abstract Views
1,398
PlumX Metrics
!

Under construction: SSRN citations while be offline until July when we will launch a brand new and improved citations service, check here for more details.

For more information