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
Date Written: January 17, 2019
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: Suggested Citation