Societal secrecy and ADR IPOs underpricing

Axel Grossmann, Thanh Ngo, Marc W. Simpson

Research output: Contribution to journalArticlepeer-review

Abstract

This study examines 350 Level III ADR IPOs from 35 countries between 1990 and 2020 to explore the link between societal secrecy and IPO underpricing. Focusing on ADR IPOs, we hypothesize that firms from higher secrecy countries, compared to firms from low secrecy countries, benefit more from public offerings in a low secrecy country. U.S. investors might value these firms relatively more due to the reduction in information asymmetry and higher expected diversification benefits. The results support our hypothesis, showing that ADR IPO underpricing is lower for ADRs from high secrecy countries. These findings hold true across various measures and controls, ensuring robustness.

Original languageEnglish
Article number100888
JournalJournal of Behavioral and Experimental Finance
Volume41
DOIs
StatePublished - Mar 2024

Keywords

  • American depositary receipts
  • Cross-border investments
  • Initial public offerings
  • Societal secrecy

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