Liquidity Benefits from IPO Underpricing : Ownership Dispersion or Information Effect

摘要

Our study investigates by which channels IPO underpricing impacts post-listing liquidity. Using a sample of IPOs undertaken on Euronext with diverse mechanisms, we show that when ownership structure is not influenced by initial underpricing, this underpricing still has a positive impact on aftermarket liquidity by a virtuous cycle related to analyst coverage.The analyst coverage purchased by initial underpricing reduces information asymmetry costsand illiquidity in the secondary market. The public information produced by analysts has astatistically more significant impact on adverse selection costs than on the proportion ofinformed traders in the market.