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

Included in

Accounting Commons

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