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Greedy CEOs and IPO underpricing: Evidence from China

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  • Chen, Tao

Abstract

This study explores whether greedy CEOs impact initial public offering (IPO) underpricing. Using a sample of IPOs in China, we find that CEO greed is positively associated with underpricing. Our inference remains stable after overcoming the endogeneity problem. The greed impact also relies on equity-based managerial compensation. As channel analyses indicate, underpricing boosts share subscription and diffuses ownership concentration, thereby enabling greedy managers to undermine corporate governance and conduct more opportunistic activities. Altogether, these findings suggest that greedy CEOs harness underpricing to pursue their private benefits of control by mitigating monitoring from blockholders.

Suggested Citation

  • Chen, Tao, 2025. "Greedy CEOs and IPO underpricing: Evidence from China," Pacific-Basin Finance Journal, Elsevier, vol. 93(C).
    • Handle: RePEc:eee:pacfin:v:93:y:2025:i:c:s0927538x25002148
    DOI: 10.1016/j.pacfin.2025.102877
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    Keywords

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    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • M12 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Personnel Management; Executives; Executive Compensation

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