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Voluntary Disclosure with Informed Trading in the IPO Market




We examine voluntary disclosure and capital investment by an informed manager in an initial public offering (IPO) in the presence of informed and uninformed investors. We find that in equilibrium, disclosure is more forthcoming—and investment efficiency is lower—when a greater fraction of the investment community is already informed. Moreover, managers disclose more information when the likelihood of an information event is higher, more equity is issued, or the cost of information acquisition is lower. Investment efficiency and the expected level of underpricing are non‐monotonic in the likelihood that the manager is privately informed.

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  • Praveen Kumar & Nisan Langberg & K. Sivaramakrishnan, 2016. "Voluntary Disclosure with Informed Trading in the IPO Market," Journal of Accounting Research, Wiley Blackwell, vol. 54(5), pages 1365-1394, December.
  • Handle: RePEc:bla:joares:v:54:y:2016:i:5:p:1365-1394
    DOI: 10.1111/1475-679X.12133

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    Cited by:

    1. Chang, Young Bong & Kwon, YoungOk, 2020. "Attention-grabbing IPOs in early stages for IT firms: An empirical analysis of post-IPO performance," Journal of Business Research, Elsevier, vol. 109(C), pages 111-119.

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