Department of Accountancy and Law
Accounting conservatism and IPO underpricing: China evidence
This study examines how accounting conservatism impacts underpricing of initial public offerings (IPOs) in the Chinese stock market. In addition, we investigate how information asymmetry affects the association of accounting conservatism with IPO underpricing. Based on regression analysis of 674 A-shares companies that went public through IPOs at both Shanghai and Shenzhen Stock Exchanges in China during 2001-2009, we find that (1) accounting conservatism is negatively associated with the magnitude of IPO underpricing; and (2) the relationship between accounting conservatism and IPO underpricing is more pronounced when information asymmetry is high. The findings should shed a light on what drives IPO underpricing and how it could be affected by accounting conservatism in an emerging economy. © 2012 Elsevier Inc..
Accounting conservatism, Chinese accounting, Information asymmetry, IPO in China, IPO underpricing
Source Publication Title
Journal of International Accounting, Auditing and Taxation
Link to Publisher's Edition
Lin, Z., & Tian, Z. (2012). Accounting conservatism and IPO underpricing: China evidence. Journal of International Accounting, Auditing and Taxation, 21 (2), 127-144. https://doi.org/10.1016/j.intaccaudtax.2012.07.003