Publication Type
Journal Article
Version
submittedVersion
Publication Date
9-2022
Abstract
Using an international sample of IPO firms from 36 countries and a country-level index for societal trust, we find strong evidence that societal trust is negatively associated with the degree of IPO underpricing. In cross-sectional analyses, we find that the effect of societal trust in reducing IPO underpricing is more pronounced when the information environment is less transparent, when the stock market environment is less robust, and when legal institutions are weaker, settings where the effect of trust is likely to be more salient. Our study contributes to and extends the literature by providing strong evidence that an informal institution such as societal trust has an important and consistent influence on international IPO underpricing.(c) 2022 Elsevier B.V. All rights reserved.
Keywords
Societal trust, IPO underpricing, Information environment, Stock market participation
Discipline
Accounting
Research Areas
Corporate Reporting and Disclosure
Publication
Journal of Banking and Finance
Volume
142
First Page
1
Last Page
19
ISSN
0378-4266
Identifier
10.1016/j.jbankfin.2022.106557
Publisher
Elsevier
Citation
KANAGARETNAM, Kiridaran; LEE, Kiat Bee Jimmy; LIM, Chee Yeow; and LOBO, Gerald J..
Trusting the stock market: Further evidence from IPOs around the world. (2022). Journal of Banking and Finance. 142, 1-19.
Available at: https://ink.library.smu.edu.sg/soa_research/1975
Creative Commons License
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