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The impact of industrial districts on the pricing of IPOs

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  • Harris, Oneil

Abstract

This paper examines the impact that industrial districts–a concentration of industry peers in the same geographic area–have on the pricing of initial public offerings (IPOs). I provide robust evidence that firms going public in more concentrated districts are more heavily underpriced than other IPO firms. In general, the results support the notion that the competitive pressures within industrial districts raise the risk profile of IPOs and discourage voluntary disclosure of value-relevant information because of increased proprietary costs. There is also strong evidence to suggest that the increased underpricing of IPOs in industrial districts partially represents investor compensation for the location premium associated with more isolated areas.

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  • Harris, Oneil, 2018. "The impact of industrial districts on the pricing of IPOs," The Quarterly Review of Economics and Finance, Elsevier, vol. 69(C), pages 274-285.
    • Handle: RePEc:eee:quaeco:v:69:y:2018:i:c:p:274-285
    DOI: 10.1016/j.qref.2018.03.010
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    Cited by:

    1. Harris, Oneil & Karl, J. Bradley & Lawrence, Ericka, 2019. "CEO compensation and earnings management: Does gender really matters?," Journal of Business Research, Elsevier, vol. 98(C), pages 1-14.

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    More about this item

    Keywords

    IPO; Geographic location; Industrial districts;
    All these keywords.

    JEL classification:

    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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