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Investor sentiment and IPO pricing during pre-market and aftermarket periods: Evidence from Hong Kong

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  • Jiang, Li
  • Li, Gao
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    Abstract

    Using a sample of 293 IPOs in Hong Kong, we separately measure pre-market and aftermarket sentiments and examine their impact on IPO pricing in a two-stage framework. We find that underwriters only partially adjust offer price to reflect pre-market sentiment and money left on the table is positively related to the deterioration of investor sentiment in the aftermarket period. We also show that aftermarket sentiment causes a further price run-up in the secondary market. Overall, our findings suggest that institutional investors play an important role of re-distributing shares in the secondary market and underwriters take into consideration of investor sentiment in pricing IPOs during pre-market and aftermarket periods.

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    Bibliographic Info

    Article provided by Elsevier in its journal Pacific-Basin Finance Journal.

    Volume (Year): 23 (2013)
    Issue (Month): C ()
    Pages: 65-82

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    Handle: RePEc:eee:pacfin:v:23:y:2013:i:c:p:65-82

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    Web page: http://www.elsevier.com/locate/pacfin

    Related research

    Keywords: Investor sentiment; IPO pricing; Institutional investors; Aftermarket trading;

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