Does individual investors' attention influence underwriters' IPO pricing?. Issue 34 (20th July 2020) - Huang, Yuqin
ABSTRACT: Using a unique Chinese IPO bidding dataset and a particular social media dataset, we examine the impact of individual investors' attention on underwriters' offer price adjustment, offer price revision, IPO initial returns, and long-term performance. We find that when a company receives more attention from individual investors before the underwriter finalizes the offer price, the underwriter will adjust the offer price higher. Moreover, we find that the IPO initial returns are significantly positively related to individual investors' attention. These findings suggest that individual investors will influence underwriters' pricing behaviour from a new perspective, – –investors' attention. Finally, we do not find a significant relationship between individual investors' attention and IPO long-run performance.