Sentence examples for underpricing problems from inspiring English sources

This in turn leads to less severe IPO underpricing problems.

Specifically, we find strong and robust evidence that IPO firms from countries with higher economic freedom, especially higher financial freedom, have significantly less serious IPO underpricing problems.

Using a large sample of IPO initial returns across 22 countries over a 21-year period from July 1993 to December 2014, we find that firms in economies with higher levels of economic freedom have less severe underpricing problems.

Using the Heritage Foundation's Index of Economic Freedom IEFF) as a proxy for the heterogeneous institutional environment, and a sample of 3728 IPOs from 22 countries and regions over the period 1993 2014, we find that countries with higher economic freedom have significantly less serious IPO underpricing problems.

For the IPO-specific control variables, IPO size (Proceeds)is often used as a proxy for large firms that are generally believed to have less severe information asymmetry problems and thus less underpricing problems (Ritter, 1984; Arugaslan et al., 2004; Boulton et al., 2011.

Here, we provide new evidence that financial freedom also helps to alleviate the IPO underpricing problem.

Moreover, we find that among the 10 economic freedom factors covered by theIEF, financial freedom related factors play a more important role in reducing the IPO underpricing problem.

Finally, consistent with the market sentiment hypothesis, we find strong evidence that pre-IPO market sentiment influences IPO first-day returns, and that the IPO underpricing problem is less severe when the market is bearish.

We postulate that a better institutional environment helps to reduce the IPO underpricing problem after controlling for firm-specific factors such as information asymmetry and macro factors such as market sentiment and economic development.

However, that situation creates adverse selection problems when IPOs are underpriced.

As a whole, a free economy could help reduce the severity of asymmetric information, agency problems and transaction costs for IPO firms, which in turn reduce IPO underpricing (Rock, 1986; Ritter, 1987; Allen and Faulhaber, 1989; Brennan and Franks, 1997; Mok and Hui, 1998; Aggarwal and Conroy, 2000; Ljungqvist, 2007; Boulton et al., 2011; Ghoul et al., 2011; Boulton et al., 2014.