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Comparable Stocks, Boundedly Rational Stock Markets and IPO Entry Rates

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  • Jay Chok
  • Jifeng Qian

Abstract

In this study, we examine how initial public offerings (IPO) entry rates are affected when stock markets are boundedly rational and IPO firms infer information from their counterparts in the market. We hypothesize a curvilinear relationship between the number of comparable stocks and initial public offerings (IPO) entry rates into the NASDAQ Stock Exchange. Furthermore, we argue that trading volume and changes in stock returns partially mediates the relationship between the number of comparable stocks and IPO entry rates. The statistical evidence provides strong support for the hypotheses.

Suggested Citation

  • Jay Chok & Jifeng Qian, 2013. "Comparable Stocks, Boundedly Rational Stock Markets and IPO Entry Rates," PLOS ONE, Public Library of Science, vol. 8(5), pages 1-8, May.
    • Handle: RePEc:plo:pone00:0061474
    DOI: 10.1371/journal.pone.0061474
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    References listed on IDEAS

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