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Does Investor Sentiment Have Certain Impacts on IPO Underpricing Rate?

In: Proceedings of 20th International Conference on Industrial Engineering and Engineering Management

Author

Listed:
  • Song Wang

    (Zhejiang University)

  • Yao Yao

    (Zhejiang University)

Abstract

High IPO underpricing is a major feature of China’s stock market and adequate studies of this issue have been made based on the traditional efficient market hypothesis, whereas using behavioral finance to study IPO underpricing is still a new topic. We employ 60 GEM IPO companies listed between Oct 30th 2009 and Mar 19th 2010 as samples, and analyze the impact of investor behavior on IPO underpricing based on investor sentiment supported by behavioral finance theory. According to our research, the price of the new stocks on the first day is more likely to be overestimated with higher investor sentiment, which generates a higher IPO underpricing rate.

Suggested Citation

  • Song Wang & Yao Yao, 2013. "Does Investor Sentiment Have Certain Impacts on IPO Underpricing Rate?," Springer Books, in: Ershi Qi & Jiang Shen & Runliang Dou (ed.), Proceedings of 20th International Conference on Industrial Engineering and Engineering Management, edition 127, pages 321-328, Springer.
    • Handle: RePEc:spr:sprchp:978-3-642-40072-8_31
    DOI: 10.1007/978-3-642-40072-8_31
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