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This paper examines (1) whether auditor type affects initial public offering (IPO) pricing; (2) whether the effect of IPO pricing is different for clients with different ownership structures. We find that (1) firms being audited by Big 4 accounting firms receive IPO premium while others being audited by local accounting firms do not; (2) Big 4 auditors receive higher audit fees than China's Top 10 or small local auditors. This paper extends the prior research (e.g., Kumar, P and N Langberg (2009). Corporate fraud and investment distortions in efficient capital markets. The RAND Journal of Economics, 40, 144–172) that reduces agency conflicts between shareholders and manager (by means of better audit quality) and also reconciles corporate misreporting and investment distortions.

Most Korean IPOs show significant initial underpricing which accounts for high initial returns. Our study explores the institutional and regulatory factors that have affected both the offering and after-market pricing mechanisms to test several hypotheses that might explain this underpricing in the Korean IPO market. We find a systematic difference in the initial stock price performance of new issues in an environment where firms have different motives for going public. We also find that in less regulated periods, the explanatory power of the variables relating to both the signaling and ex ante uncertainty hypotheses increase.

PurposeThe purpose of this paper is to investigate the changes in initial public offering (IPO) underpricing and short‐run performance following a regulatory reform (No. 54 [2002] China Securities Regulatory Commission (CSRC)) of the method of allocating IPO shares in China.Design/methodology/approachOn 20 May 2002, the CSRC announced that IPO subscription and allotment would be based on the market value of investors' tradable shareholdings. Before the regulatory change, this was determined by the amount of funds used for subscription. The reform was intended to increase participation by both smaller and institutional investors. Based on a sample of 209 IPOs in the Shanghai A‐share market during the period 2001‐2003, the paper employs an event study methodology to examine the impact of this IPO regulatory reform.FindingsThe paper finds that the overall (pre‐ and post‐reform) average abnormal initial return of 116.94 per cent is lower than in earlier studies of Chinese IPOs but higher than in other markets. Post‐reform underpricing decreases by 42.27 per cent compared to pre‐reform levels. In the post‐listing aftermarket a pre‐reform upward trend of cumulative abnormal returns was reversed to become downward post‐reform. The results suggest that the regulatory change has encouraged well‐informed investors, consistent with Information Cascades and Bandwagon hypotheses. It also appears that the reform improved market efficiency and secondary market liquidity.Originality/valueThe findings shed light on the relationship between IPO costs, IPO pricing, market liquidity and market microstructure. They also have important implications for issuers, underwriters and in particular for policy markers.

This paper examines the macro determinants of successful IPOs, focusing on the impact of underwriter selection, pricing strategy and social media on post-IPO company growth. This paper also illustrates the importance of selecting a reputable underwriting brokerage firm when the companies are sturcturing and executing an IPO and how that reputation can affect pricing and how their reputation affects pricing and long-term share price performance. It also examines the IPO pricing process and highlights the importance of accurate pricing to prevent underpricing and ensure equity stability. Furthermore, the paper examines the role of social media in shaping investor sentiment and provides insight into how positive media coverage affects a company's share price in the short and long term. Overall, the aim of this paper is to analyse the key factors influencing IPO success and provide insights into how companies can navigate the complexities of IPOs to maximize post-IPO growth and profitability.

This study investigates whether the extent of earnings management has any impact on offer price in initial public offering (IPO). Using a sample of 581 JASDAQ IPO firms, we find that offer price reflects earnings management to some extent. Firms with conservative earnings management tend to have higher offer prices, and firms managing earnings aggressively tend to be discounted when they fail to exhibit smooth earnings growth. These results are consistent with the hypothesis that underwriters adjust for the effect of earnings management to appropriately pricing the issues. Overall, our evidence could lead to another explanation for IPO underpricing.

The process of a company's IPO application passing the SEC's review and successfully raising funds from the public by issuing shares on the stock exchange signifies that the company has become a public company and its shares can be listed and traded on the stock exchange. However, the IPO process is actually quite complex, and there are numerous roles involved in the IPO, and a small mistake related to the conduct of the IPO can result in the company not being able to go public. The Securities and Futures Commission (SFC) has some basic requirements for the issuance conditions of the proposed listed company, which gives the proposed listed company an order to ensure that its business system is complete and has the ability to operate independently directly to the market, so that it can have a more definite answer to the success or failure of the IPO. Based on this, the article clarifies the meaning of IPO, and the conditions that the company needs to have and its importance, and lists several factors one by one, such as pricing, efficiency, cost, and stock offering.