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Effect of geographical distance between underwriters and listed companies on IPO underpricing: Evidence from China's A-share market

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  • Wang, Feng
  • Chai, Wei
  • Yan, Bin
  • Shan, Jing
  • Fan, Wenna

Abstract

This study uses samples from China's A-share IPO between 2008 and 2018 to examine the relationship between geographical distance and IPO underpricing. We find that geographical distance between underwriters and the listed companies is significantly and negatively associated with the IPO underpricing, indicating that geographical proximity increases the IPO underpricing. We further find that reputation mechanism of underwriters needs further improvement while regulatory scrutiny could improve efficiency of capital market in China. This study further expands the research perspective on IPO underpricing.

Suggested Citation

  • Wang, Feng & Chai, Wei & Yan, Bin & Shan, Jing & Fan, Wenna, 2022. "Effect of geographical distance between underwriters and listed companies on IPO underpricing: Evidence from China's A-share market," International Review of Economics & Finance, Elsevier, vol. 79(C), pages 340-352.
    • Handle: RePEc:eee:reveco:v:79:y:2022:i:c:p:340-352
    DOI: 10.1016/j.iref.2022.02.060
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    More about this item

    Keywords

    IPO underpricing; Underwriter; Geographical distance; Listed company;
    All these keywords.

    JEL classification:

    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • L20 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - General

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