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Retail investor attention and IPO prices with a pre-IPO market

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  • Kao, Lanfeng
  • Chen, Anlin
  • Lu, Cheng-Shou

Abstract

This study investigates whether retail investor attention influences initial public offering (IPO) subscription and prices in Taiwan's economy, which features little information asymmetry because of its pre-IPO market. We find that IPO trading prices in a pre-IPO market increase with investor attention before IPO filing date. Our results support attention theory and indicate that retail investors naïvely subscribe to IPOs that attract their attention, whereas underwriters employ pre-IPO market trading information rather than investor attention to price IPOs. The trading price in a premarket is more valuable than is retail investor attention for IPO pricing.

Suggested Citation

  • Kao, Lanfeng & Chen, Anlin & Lu, Cheng-Shou, 2022. "Retail investor attention and IPO prices with a pre-IPO market," International Review of Economics & Finance, Elsevier, vol. 82(C), pages 416-432.
    • Handle: RePEc:eee:reveco:v:82:y:2022:i:c:p:416-432
    DOI: 10.1016/j.iref.2022.07.007
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    Cited by:

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    3. Wang, Shuangjin & Wang, Puxuan & Cebula, Richard J. & Foley, Maggie, 2023. "Board characteristics and IPO underpricing in China: The perspective of moderating effect of venture capitalists," Finance Research Letters, Elsevier, vol. 52(C).

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    More about this item

    Keywords

    Attention theory; Google search volume; Investor attention; IPO valuation; Pre-IPO market;
    All these keywords.

    JEL classification:

    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • 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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