Investor Awareness or Information Asymmetry? Wikipedia and IPO Underpricing

Financial Review, Vol. 56, No. 3, pp. 535-561 (2021)

42 Pages Posted: 31 Jan 2017 Last revised: 12 Jul 2021

See all articles by Thomas J. Boulton

Thomas J. Boulton

Miami University

Bill B. Francis

Rensselaer Polytechnic Institute (RPI) - Lally School of Management

Thomas Shohfi

U.S. Securities and Exchange Commission

Daqi Xin

Nankai University

Date Written: April 19, 2021

Abstract

We use the presence of a Wikipedia article for initial public offering (IPO) firms to test theories of information asymmetry and investor awareness. While we find limited support for the former, our results provide strong support for theories of investor awareness. Specifically, IPO firms with a Wikipedia article exhibit significantly higher underpricing and offer price revisions than do IPO firms without a Wikipedia article. Investor awareness has positive long-term effects, including greater analyst following and institutional ownership for up to three years after the offering. The effect is robust to firm-specific Google search volume, news coverage, retail trading intensity, social media activity, propensity score matching, and an instrumental variable approach.

Keywords: Initial Public Offerings, Investor Attention, Underpricing, Wikipedia

JEL Classification: D82, G14, G24, G32

Suggested Citation

Boulton, Thomas J. and Francis, Bill B. and Shohfi, Thomas and Xin, Daqi, Investor Awareness or Information Asymmetry? Wikipedia and IPO Underpricing (April 19, 2021). Financial Review, Vol. 56, No. 3, pp. 535-561 (2021), Available at SSRN: https://ssrn.com/abstract=2908624 or http://dx.doi.org/10.2139/ssrn.2908624

Thomas J. Boulton

Miami University ( email )

3028 Farmer School of Business
Oxford, OH 45056
United States
(513) 529-1563 (Phone)
(513) 529-8598 (Fax)

Bill B. Francis

Rensselaer Polytechnic Institute (RPI) - Lally School of Management ( email )

Troy, NY 12180
United States

Thomas Shohfi (Contact Author)

U.S. Securities and Exchange Commission ( email )

Washington, DC
United States

HOME PAGE: http://shohfi.com/

Daqi Xin

Nankai University ( email )

Tianjin
China

Do you have negative results from your research you’d like to share?

Paper statistics

Downloads
1,038
Abstract Views
4,126
Rank
39,808
PlumX Metrics