The underpricing of initial public offerings in a context of asymmetric information: an empirical study in the French context

摘要

The present study's major objective consists in providing an empirical examination of the effect of the information asymmetry variables on the IPOs underpricing on the French market, based on the agency theory. The results have shown that the securities' underpricing can be explained by variables related to information asymmetry between the different actors in the stock market introduction including the issuing firm, the introducing intermediaries and the investors. The ex-ante uncertainty about the equilibrium value of the newly introduced securities is an indicator of information asymmetry which is, in turn, connected to certain variables pertaining to the issuing firm's characteristics as well as the issuance ones. Our results have shown that the ex-ante uncertainty is positively associated with the underpricing level. In addition, they have indicated that underpricing can also be explained by the revelation of favourable information by the informed institutional investors in the book building procedure. This eventually highlights the presence of a price partial adjustment phenomenon on the French market.