Disclosure of intended use of proceeds and underpricing in initial public offerings

• 成果类型: Article
• 署名作者: Leone, Andrew J.; Rock, Steve; Vasvari, Florin P.
• 署名单位: Pennsylvania Commonwealth System of Higher Education (PCSHE); Pennsylvania State University; Pennsylvania State University - University Park; University of Colorado System; University of Colorado Boulder; University of Connecticut
• 刊物名称: JOURNAL OF ACCOUNTING RESEARCH
• ISSN/ISSBN: 0021-8456
• DOI: 10.1111/j.1475-679X.2006.00229.x
• 发表日期: 2007
• 页码: 111-153
• 关键词: LONG-RUN PERFORMANCE; CORPORATE DISCLOSURE; empirical-analysis; AGENCY COSTS; INVESTMENT; reputation; BEHAVIOR; MARKET; governance; companies

摘要

We use the context of a company's initial public offering (IPO) of equity securities as a capital-markets setting to empirically study the economic consequences of endogenous disclosure. In particular, we examine the relation between the extent of dollar detail an IPO issuer provides regarding their intended use of proceeds and first-day underpricing. We document substantial variation in the specificity of this disclosure and find that an increase in such specificity is associated with lower IPO underpricing. Overall, our results suggest that IPOs that provide specific use-of-proceeds disclosures have less ex ante uncertainty, in the sense that these disclosures help investors estimate the dispersion of secondary market values. Our paper contributes to the empirical accounting literature by documenting an association between voluntary disclosure and what is arguably the foremost cost of raising initial equity capital (i.e., IPO underpricing).