Litigation risk and IPO underpricing

• 成果类型: Article
• 署名作者: Lowry, M; Shu, S
• 署名单位: Boston College; Pennsylvania Commonwealth System of Higher Education (PCSHE); Pennsylvania State University; Pennsylvania State University - University Park
• 刊物名称: JOURNAL OF FINANCIAL ECONOMICS
• ISSN/ISSBN: 0304-405X
• DOI: 10.1016/S0304-405X(02)00144-7
• 发表日期: 2002
• 页码: 309-335
• 关键词: Initial public offering; IPO underpricing; Securities litigation; endogeneity

摘要

We examine the relation between risk and IPO underpricing and test two aspects of the litigation-risk hypothesis: (1) firms with higher litigation risk underprice their IPOs by a greater amount as a form of insurance (insurance effect) and (2) higher underpricing lowers expected litigation costs (deterrence effect). To adjust for the endogeneity bias in previous studies, we use a simultaneous equation framework. Evidence provides support for both aspects of the litigation-risk hypothesis. (C) 2002 Elsevier Science Ltd. All rights reserved.