Country-level accounting enforcement and IPO underpricing
This lecture is part of Prof. Schäfer's ring lecture "New Frontiers in Law and Economics".
Using a sample of 1,930 IPOs in 30 countries in the years 2011-2017, Prof. Dr. Jochen Bigus, Freie Universität Berlin, predicts and finds that higher country-levels of accounting enforcement are associated with less underpricing, both directly, but also indirectly, by mitigating the impact of shareholder litigation. He shows that accounting enforcement matters in reducing the cost of equity.
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