Economic freedom and IPO underpricing

Frontiers of Business Research in China

Table 8 IPO Initial Returns, Economic Freedom and Law Origin (July 1993–December2014)

This table provides the regression results ofthe relation between IPO initial returns, the Economic Freedom Index and the law system variable. Total_V is the proxy of economic freedom variable. Rank is the rank of Total_V. LawSys is the common law system dummy variable. 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 underwriters 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