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Proximity and IPO underpricing

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  • Nielsson, Ulf
  • Wójcik, Dariusz

Abstract

This paper analyses the relationship between issuers' location and IPO underpricing in the U.S. from 1986 to 2014. Issuers headquartered in rural areas are associated with lower underpricing compared to urban firms. This finding is consistent with strong local bias in rural areas accompanied by superior local information, which associates with more accurate pricing and less money left on the table. The paper further finds that refined measures of local bias, such as proximity to finance professionals and density of financial expertise, correlate more with IPO underpricing than proximity to large cities.

Suggested Citation

  • Nielsson, Ulf & Wójcik, Dariusz, 2016. "Proximity and IPO underpricing," Journal of Corporate Finance, Elsevier, vol. 38(C), pages 92-105.
  • Handle: RePEc:eee:corfin:v:38:y:2016:i:c:p:92-105
    DOI: 10.1016/j.jcorpfin.2016.03.012
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    More about this item

    Keywords

    IPO underpricing; Proximity; Local bias;

    JEL classification:

    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General

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