Institutional characteristics, signaling variables and IPO initial returns: A study on OECD countries
Purpose – This paper aims to provide empirical evidence on the extent of alteration institutional characteristics, i.e. legal origin and corruption levels, may have on the signaling effects of auditors’ reputation, underwriters’ reputation and ownership retention on initial public offering (IPO) ini...
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| Format: | Article |
| Language: | English |
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Emerald Publishing
2019-03-01
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| Series: | PSU Research Review |
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| Online Access: | https://www.emerald.com/insight/content/doi/10.1108/PRR-10-2016-0003/full/pdf?title=institutional-characteristics-signaling-variables-and-ipo-initial-returns-a-study-on-oecd-countries |
| _version_ | 1811257938704072704 |
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| author | Sheela Devi D. Sundarasen |
| author_facet | Sheela Devi D. Sundarasen |
| author_sort | Sheela Devi D. Sundarasen |
| collection | DOAJ |
| description | Purpose – This paper aims to provide empirical evidence on the extent of alteration institutional characteristics, i.e. legal origin and corruption levels, may have on the signaling effects of auditors’ reputation, underwriters’ reputation and ownership retention on initial public offering (IPO) initial returns in OECD countries. Design/methodology/approach – Cross-sectional data composed of 6,182 IPOs from 30 OECD countries are used for 2003-2012. Ordinary least square with multiple linear regressions is used to test the hypotheses. Findings – The findings indicate that the legal framework and corruption level of a country alters the signaling effects of underwriters’ reputation, auditors’ reputation and ownership retention in an IPO environment. These three variables mitigate information asymmetry, signal firm value to potential investors and ultimately decrease IPO initial returns. This relationship is more significant in the civil law countries. Corruption levels negatively moderate the relationship in the common law and Scandinavian civil law countries but have no significance in the German and French civil law countries, indicating the importance of the signaling variables in these two civil law countries. Originality/value – This study examines the extent of the alterations that the legal framework and the corruption levels cause to the signaling relationship between auditors’ reputation, underwriters’ reputation and ownership retention on IPO initial returns in selected OECD countries. |
| first_indexed | 2024-04-12T18:05:15Z |
| format | Article |
| id | doaj.art-6f44d9f7ddbd455391e3437f9dcb0bc3 |
| institution | Directory Open Access Journal |
| issn | 2399-1747 2398-4007 |
| language | English |
| last_indexed | 2024-04-12T18:05:15Z |
| publishDate | 2019-03-01 |
| publisher | Emerald Publishing |
| record_format | Article |
| series | PSU Research Review |
| spelling | doaj.art-6f44d9f7ddbd455391e3437f9dcb0bc32022-12-22T03:22:00ZengEmerald PublishingPSU Research Review2399-17472398-40072019-03-0131294910.1108/PRR-10-2016-0003622705Institutional characteristics, signaling variables and IPO initial returns: A study on OECD countriesSheela Devi D. Sundarasen0Prince Sultan University, Riyadh, Saudi ArabiaPurpose – This paper aims to provide empirical evidence on the extent of alteration institutional characteristics, i.e. legal origin and corruption levels, may have on the signaling effects of auditors’ reputation, underwriters’ reputation and ownership retention on initial public offering (IPO) initial returns in OECD countries. Design/methodology/approach – Cross-sectional data composed of 6,182 IPOs from 30 OECD countries are used for 2003-2012. Ordinary least square with multiple linear regressions is used to test the hypotheses. Findings – The findings indicate that the legal framework and corruption level of a country alters the signaling effects of underwriters’ reputation, auditors’ reputation and ownership retention in an IPO environment. These three variables mitigate information asymmetry, signal firm value to potential investors and ultimately decrease IPO initial returns. This relationship is more significant in the civil law countries. Corruption levels negatively moderate the relationship in the common law and Scandinavian civil law countries but have no significance in the German and French civil law countries, indicating the importance of the signaling variables in these two civil law countries. Originality/value – This study examines the extent of the alterations that the legal framework and the corruption levels cause to the signaling relationship between auditors’ reputation, underwriters’ reputation and ownership retention on IPO initial returns in selected OECD countries.https://www.emerald.com/insight/content/doi/10.1108/PRR-10-2016-0003/full/pdf?title=institutional-characteristics-signaling-variables-and-ipo-initial-returns-a-study-on-oecd-countriesipolegal originauditors’ reputationcorruption levelownership retentionunderwriters’ reputation |
| spellingShingle | Sheela Devi D. Sundarasen Institutional characteristics, signaling variables and IPO initial returns: A study on OECD countries PSU Research Review ipo legal origin auditors’ reputation corruption level ownership retention underwriters’ reputation |
| title | Institutional characteristics, signaling variables and IPO initial returns: A study on OECD countries |
| title_full | Institutional characteristics, signaling variables and IPO initial returns: A study on OECD countries |
| title_fullStr | Institutional characteristics, signaling variables and IPO initial returns: A study on OECD countries |
| title_full_unstemmed | Institutional characteristics, signaling variables and IPO initial returns: A study on OECD countries |
| title_short | Institutional characteristics, signaling variables and IPO initial returns: A study on OECD countries |
| title_sort | institutional characteristics signaling variables and ipo initial returns a study on oecd countries |
| topic | ipo legal origin auditors’ reputation corruption level ownership retention underwriters’ reputation |
| url | https://www.emerald.com/insight/content/doi/10.1108/PRR-10-2016-0003/full/pdf?title=institutional-characteristics-signaling-variables-and-ipo-initial-returns-a-study-on-oecd-countries |
| work_keys_str_mv | AT sheeladevidsundarasen institutionalcharacteristicssignalingvariablesandipoinitialreturnsastudyonoecdcountries |