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Media Coverage and IPO Pricing around the World

Published online by Cambridge University Press:  26 July 2019

Yangyang Chen
Chen,, City University of Hong Kong Department of Accountancy
Abhinav Goyal
Goyal,, University of Liverpool Department of Accounting and Finance, Management School
Madhu Veeraraghavan
Veeraraghavan,, T.A. PAI Management Institute Finance and Strategy Area
Leon Zolotoy*
Zolotoy,, Melbourne Business School, University of Melbourne
Zolotoy (corresponding author),


We study how media coverage impacts pricing of initial public offerings (IPOs) around the world. Higher media coverage in the pre-IPO period leads to lower IPO initial returns. The effect is mitigated in countries with better financial reporting quality, greater shareholder rights protection, and more stringent media censorship, and for IPOs “certified” by reputable intermediaries, while it is amplified in countries with higher levels of media penetration and media trust. Further, IPOs with higher pre-IPO media coverage have lower ex post price revision volatility. Our findings suggest that higher pre-IPO media coverage reduces information asymmetry among investors, leading to less underpriced IPOs.

Research Article
Copyright © Michael G. Foster School of Business, University of Washington 2019

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We thank Jarrad Harford (the editor) and Chad Zutter (the referee) for helpful comments and suggestions. We also appreciate helpful comments on earlier versions of this paper from seminar and session participants at the 2017 Australasian Banking and Finance Conference, 2018 IIM-Ahmedabad JAAF Symposium, 2018 FMA Asia Conference, 2018 Asian Finance Association Annual Meeting, University of Liverpool, University College Dublin, University of Maynooth, Xi’an Jiaotong-Liverpool University, Queen’s University Belfast, Hong Kong Polytechnic University, Central University of Finance and Economics, Beijing Technology and Business University, Tsinghua University, Lingnan University, and Xi’an Jiaotong University. We thank Savitha Heggede for excellent research assistance. Veeraraghavan thanks the T.A. PAI Chair Professorship for funding. Part of the work on this paper was done while Chen was affiliated with the Hong Kong Polytechnic University. This paper won the best paper award of the 2018 Asian Finance Association Annual Meeting.


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