{"title":"Does oil price uncertainty affect IPO underpricing? Evidence from China","authors":"Xin Xiang , Xu He , Yajie Han","doi":"10.1016/j.eap.2024.09.007","DOIUrl":null,"url":null,"abstract":"<div><p>Oil is regarded as a crucial energy source impacting firms’ production, investments, and even financing. In this study, we investigate the relationship between oil price uncertainty and underpricing of initial public offerings (IPOs). Using a sample of IPO firms in the Chinese A-share market between 2010 and 2022, we demonstrate that oil price uncertainty is positively associated with IPO underpricing. The transmission mechanism suggests that oil price uncertainty increases information asymmetry, prompting IPO firms to use underpricing to signal their profitability and ensure the participation of investors. Moreover, the positive relationship between oil price uncertainty and IPO underpricing is strengthened in state-owned enterprises and is weakened in firms with enhanced corporate governance. We contribute to the existing literature by establishing a new link between oil price uncertainty and IPO underpricing.</p></div>","PeriodicalId":54200,"journal":{"name":"Economic Analysis and Policy","volume":"84 ","pages":"Pages 240-259"},"PeriodicalIF":7.9000,"publicationDate":"2024-09-02","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"0","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"Economic Analysis and Policy","FirstCategoryId":"96","ListUrlMain":"https://www.sciencedirect.com/science/article/pii/S0313592624002315","RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q1","JCRName":"ECONOMICS","Score":null,"Total":0}
引用次数: 0
Abstract
Oil is regarded as a crucial energy source impacting firms’ production, investments, and even financing. In this study, we investigate the relationship between oil price uncertainty and underpricing of initial public offerings (IPOs). Using a sample of IPO firms in the Chinese A-share market between 2010 and 2022, we demonstrate that oil price uncertainty is positively associated with IPO underpricing. The transmission mechanism suggests that oil price uncertainty increases information asymmetry, prompting IPO firms to use underpricing to signal their profitability and ensure the participation of investors. Moreover, the positive relationship between oil price uncertainty and IPO underpricing is strengthened in state-owned enterprises and is weakened in firms with enhanced corporate governance. We contribute to the existing literature by establishing a new link between oil price uncertainty and IPO underpricing.
期刊介绍：
Economic Analysis and Policy (established 1970) publishes articles from all branches of economics with a particular focus on research, theoretical and applied, which has strong policy relevance. The journal also publishes survey articles and empirical replications on key policy issues. Authors are expected to highlight the main insights in a non-technical introduction and in the conclusion.
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