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Information Asymmetry and Investor Valuations of Initial Public Offerings: Two Dimensions of Organizational Reputation as Stock Market Signals

  • Yang Liu (a1), Peng Cheng (a2), Zhe OuYang (a2) and Ao Wang (a1)


The uncertainty and information asymmetry that surround initial public offering firms (IPOs) often introduce difficulties for potential investors to discern organizational value, thereby leading to ‘underpricing’. Using the signaling theory, we investigate the role of organizational reputation in the underpricing of IPOs. We analyze 463 initial public offerings in China from the period of 2010 to 2016 and find that being known for quality and generalized favorability dimensions of reputation are negatively related with underpricing on the first day of trading. In addition, we find that the negative effects of organizational reputation on underpricing are mediated by investor attention.


Неопределенность и информационная асимметрия, которые сопровождают первоначальные публичные предложения (IPO), часто создают трудности для потенциальных инвесторов при определении организационной ценности, что приводит к “занижению цены”. На основании теории сигнализации, мы исследуем роль репутации организации при установлении заниженной цены в условиях IPO. Мы анализируем 463 первичных публичных предложений в Китае за период с 2010 по 2016 годов и приходим к выводу о том, что такие аспекты репутации, как известность своим качеством и общие благоприятные показатели, отрицательно влияют на занижение цены в первый день торгов. Более того, мы обнаруживаем, что негативное влияние организационной репутации на занижение цены нивелируется благодаря вниманию инвесторов.

La incertidumbre y las asimetrías de información que rodean las empresas de ofertas públicas iniciales (IPOs) con frecuencia presentan dificultades para inversionistas potenciales para discernir el valor organizacional, llevando con esto a una “infravaloración”. Usando la teoría de señalización, investigamos el rol de la reputación organizacional en la infravaloración de ofertas públicas iniciales. Analizamos 463 ofertas públicas iniciales en China en el periodo 2010 a 2016 y encontramos que ser conocido por calidad y favorabilidad generalizada las dimensiones de reputación se relacionan negativamente con la infravaloración en el primer día de operaciones bursátiles. Además, encontramos que los efectos negativos de la reputación organizacional en la infravaloración son mediados por la atención de los inversionistas.


Corresponding author

Corresponding author: Zhe OuYang (


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Accepted by: Senior Editor Bent Petersen



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Information Asymmetry and Investor Valuations of Initial Public Offerings: Two Dimensions of Organizational Reputation as Stock Market Signals

  • Yang Liu (a1), Peng Cheng (a2), Zhe OuYang (a2) and Ao Wang (a1)


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