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IPO Underpricing and the Location of Firms

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Abstract
We employ a sample of initial public offerings (IPOs) realized in Italy, France, and Germany over the period 1996-2019 to investigate the relationship between the degree of underpricing and the distance of the firms to financial centers. Italian and French IPOs of firms headquartered outside the reference financial center are associated with greater underpricing on average. In Italy, the greater the distance from a financial center the greater the underpricing. However, in the German case the effect of distance is statistically insignificant. Differences in the degree of local financial development across countries might explain the different relevance of firms’ locations.

Suggested Citation

  • Antonio Acconcia & Alfredo Del Monte & Luca Pennacchio & Germana Scepi, 2011. "IPO Underpricing and the Location of Firms," CSEF Working Papers 295, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy, revised 04 Feb 2021.
    • Handle: RePEc:sef:csefwp:295
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    File URL: http://www.csef.it/WP/wp295.pdf
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    Cited by:

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    2. Cosimo Abbate & Alessandro Sapio, 2016. "Gazelles and muppets in the City: Stock market listing, risk sharing, and firm growth quantiles," LEM Papers Series 2016/33, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
    3. Pennacchio, Luca, 2013. "The causal effect of venture capital backing on the underpricing of Italian IPOs," MPRA Paper 48695, University Library of Munich, Germany.
    4. Fenghua Pan & Bofei Yang, 2019. "Financial development and the geographies of startup cities: evidence from China," Small Business Economics, Springer, vol. 52(3), pages 743-758, March.
    5. Luca Pennacchio, 2013. "The role of venture capital in Italian IPOs," Economics Bulletin, AccessEcon, vol. 33(4), pages 2528-2539.
    6. Luca Pennacchio, 2014. "The causal effect of venture capital backing on the underpricing of Italian initial public offerings," Venture Capital, Taylor & Francis Journals, vol. 16(2), pages 131-155, April.

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    More about this item

    Keywords

    IPO Underpricing; Distance; Financial Center; Financial Development.;
    All these keywords.

    JEL classification:

    • C58 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Financial Econometrics
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • R1 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics

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