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Asymmetric Information in the Market for IPOs

International Journal of Finance & Banking Studies

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Title Asymmetric Information in the Market for IPOs
 
Creator Rhodes, Heather N
 
Description This study utilizes hand-collected ownership data to re-examine the signaling, agency and wealth effect theories in a matched-sample of initial public offerings (IPOs) issued in the U.S. prior to and following the passage of the Sarbanes-Oxley Act of 2002 (SOX). SOX provides some motivation for revisiting these topics because evidence exists that it may have affected the types of firms going public and ultimately the relatively importance of adverse selection and moral hazard, the asymmetric information problems with which these theories are concerned. Results on both the pre- and post-SOX samples are consistent with the signaling theory and evidence of a wealth effect exists in both eras. However, in contrast to results of studies conducted prior to SOX, both the pre- and post-SOX results give little credence to the agency theory, suggesting that SOX has not impacted investors’ concerns regarding moral hazard. Rather, the difference between the pre-SOX results and the results of previous studies suggests that SOX appeared to reduce moral hazard concerns only through its effect on the self-selection of firms going public.
 
Publisher SSBFNET
 
Date 2019-02-25
 
Type info:eu-repo/semantics/article
info:eu-repo/semantics/publishedVersion
Peer-reviewed Article
 
Format application/pdf
 
Identifier http://www.ssbfnet.com/ojs/index.php/ijfbs/article/view/114
10.20525/ijfbs.v7i3.114
 
Source International Journal of Finance & Banking Studies (2147-4486); Vol 7 No 3 (2018): July; 01-19
2147-4486
10.20525/ijfbs.v7i3
 
Language eng
 
Relation http://www.ssbfnet.com/ojs/index.php/ijfbs/article/view/114/183
 
Rights Copyright (c) 2019 International Journal of Finance & Banking Studies (2147-4486)
http://creativecommons.org/licenses/by-nc/4.0