Economic freedom and IPO underpricing

Frontiers of Business Research in China

Table 4 IPO Initial Returns and Economic Freedom with Additional Firm-specific Factors (July 1993–December 2014)

This table provides the regression results of the following model: IR _{i, t} = a ₀ + a ₁ IEF _{i, t} + a ₂ GDP _{i, t} + a ₃ Bear _{i, t} + a ₄ Bull _{i, t} + a ₅ AF _{i, t} + a ₆ SPS _{i, t} + a ₇ HCB _{i, t} + a ₈ Democ _{i, t} + a ₉ EM _{i, t} + a ₁₀ Proceeds _{i, t} + a ₁₁ Oversold _{i, t} + a ₁₂ Uwrt _{i, t} + a ₁₃ ROE _{i, t} + FE _{i, t} + ε _{i, t},
whereTotal_V is the proxy of the economic freedom variable. Rank is the rank of Total_V. GDP is the logarithm of per capital GDP of the IPO country. Bear and Bull are the pre-IPO bearish and bullish market sentiment variables, respectively. AF is analyst following. SPS is stock price synchronicity. HCB is the home bias index. Democ is democracy index. EM is earnings management measure. Proceeds is the total IPO proceeds of the issuer. Oversold is a dummy variable, which equals to one if the IPO has overallotment, and zero otherwise. Uwrt is a dummy variable, which equals to one if the underwriter of the IPO is among the top three underwriter in the country. ROE is the return on equity of the issuer 12 month before the IPO. Standard errors are clustered by nations and fiscal year. ^a, ^b and ^c represent significance at the 10, 5 and 1% levels, respectively