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Earnings Quality and International IPO Underpricing

41 Pages Posted: 20 Mar 2007 Last revised: 14 May 2014

Thomas Jason Boulton

Miami University

Scott Smart

Indiana University - Kelley School of Business - Department of Finance

Chad J. Zutter

University of Pittsburgh - Finance Group

Date Written: August 28, 2008

Abstract

This study examines the impact of country-level earnings quality on IPO underpricing. Examining 10,783 IPOs from 37 countries, we find that IPOs are underpriced less in countries where public firms produce higher quality earnings information. This finding persists after controlling for other deal- and country-specific factors that affect IPO underpricing, and it is driven neither by the large and relatively transparent markets in the U.S. and U.K. nor by the relatively opaque Japanese market. The impact of low earnings quality on underpricing is partially offset by the use of a top-tier underwriter.

Keywords: International finance, Earnings quality, Initial public offerings, Underpricing, Valuation

JEL Classification: G15, G24, G30, G32, G34

Suggested Citation

Boulton, Thomas Jason and Smart, Scott and Zutter, Chad J., Earnings Quality and International IPO Underpricing (August 28, 2008). Accounting Review, Vol. 86, No. 2, 2011. Available at SSRN: https://ssrn.com/abstract=972694

Thomas Jason Boulton

Miami University ( email )

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

Scott B. Smart

Indiana University - Kelley School of Business - Department of Finance ( email )

1309 E. 10th St.
Kelley School of Business
Bloomington, IN 47405
United States
812-855-3401 (Phone)
812-855-5875 (Fax)

Chad J. Zutter (Contact Author)

University of Pittsburgh - Finance Group ( email )

352 Mervis Hall, Katz GSOB
University of Pittsburgh
Pittsburgh, PA 15260
United States
412-648-2159 (Phone)
412-648-1693 (Fax)

HOME PAGE: http://www.pitt.edu/~czutter/

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