The effect of capital gains taxes on the initial pricing and underpricing of IPOs

• 成果类型: Article
• 署名作者: Li, Oliver Zhen; Lin, Yupeng; Robinson, John R.
• 署名单位: National University of Singapore; City University of Hong Kong; Texas A&M University System; Texas A&M University College Station
• 刊物名称: JOURNAL OF ACCOUNTING & ECONOMICS
• ISSN/ISSBN: 0165-4101
• DOI: 10.1016/j.jacceco.2015.10.004
• 发表日期: 2016
• 关键词: institutional investors; PUBLIC OFFERINGS; MARKET; return; horizons; prices; issues

摘要

We investigate the extent to which capitalization of expected capital gains taxes and the lock-in effect induced by the capital gains tax rate differential simultaneously impact the pricing and underpricing of initial public offerings (IPOs). Using a large sample of IPOs from 1987 to 2010, we estimate regressions of offer prices and first-day underpricing on tax rates. Supporting tax capitalization, IPO offer prices decrease in long-term capital gains taxes. Supporting lock-in, IPO underpricing increases in the long-term and short-term tax rate differential. These effects are consistent with capital gains taxes simultaneously reducing IPO proceeds and exacerbating IPO underpricing. (C) 2015 Elsevier B.V. All rights reserved.