Publication Type
Journal Article
Version
publishedVersion
Publication Date
5-2024
Abstract
Using an international sample of IPO firms and two country-level measures of financial literacy, we find strong evidence that financial literacy is negatively associated with IPO underpricing. In cross-sectional analyses, we find that the effect of financial literacy in reducing IPO underpricing is more pronounced when the information environment is less transparent. Employing path analysis, we document that information friction, firm transparency, and stock market participation are mechanisms that mediate this relationship. Our study contributes to and extends the literature by providing strong evidence that citizens' financial literacy has an important and consistent influence on IPO underpricing.
Discipline
Accounting | Corporate Finance | Portfolio and Security Analysis
Research Areas
Financial Intermediation and Information
Publication
Journal of Financial and Quantitative Analysis
Volume
59
Issue
3
First Page
1430
Last Page
1469
ISSN
0022-1090
Identifier
10.1017/S0022109023000315
Publisher
Cambridge University Press
Citation
JIA, Xiaoran; KANAGARETNAM, Kiridaran G.; LIM, Chee Yeow; and LOBO, Gerald J..
Financial literacy and IPO underpricing. (2024). Journal of Financial and Quantitative Analysis. 59, (3), 1430-1469.
Available at: https://ink.library.smu.edu.sg/soa_research/2010
Copyright Owner and License
Authors
Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial-No Derivative Works 4.0 International License.
Additional URL
https://doi.org/10.1017/S0022109023000315