Abstract
We provide novel evidence on the loan market benefits of high IPO underpricing. We show that greater underpricing is associated with a significantly larger within-firm reduction of post-IPO borrowing costs. This benefit of underpricing is less pronounced for firms with high ex-ante information asymmetry and is concentrated in firms with a high demand for advertisements. In addition, neither price revision before the IPO nor the short-term or long-term stock return after the IPO has a similar effect. Our results suggest that underpricing affects borrowing costs through an attention channel and highlight a real economic effect of underpricing from the loan market.
Original language | English |
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Article number | 101132 |
Pages (from-to) | 1-18 |
Number of pages | 18 |
Journal | Journal of Financial Intermediation |
Volume | 61 |
Early online date | 31 Dec 2024 |
DOIs | |
Publication status | Published - Jan 2025 |
Bibliographical note
Publisher Copyright:© 2024 Elsevier Inc.
Keywords
- Borrowing costs
- IPO
- Loan spreads
- Syndicated loans
- Underpricing