Title: IFRS and IPO underpricing: evidence from Italy

Authors: Roberto Maglio; Maria Rosaria Petraglia; Francesco Agliata

Addresses: Department of Economics, Management, and Institutions, University of Naples 'Federico II', Via Cinthia – 80126 Naples, Italy ' Department of Economics, Management, and Institutions, University of Naples 'Federico II', Via Cinthia – 80126 Naples, Italy ' Department of Economics, University of Campania 'Luigi Vanvitelli', Corso Gran Priorato di Malta, 81043 Capua (CE), Italy

Abstract: This study examines the impact of the IFRS adoption on IPO underpricing; the latter is, as known, the positive spread between the first day of trading closing price and the offer price of a newly issued share. The underpricing phenomenon is usually associated with the information asymmetry among the actors involved in the process of listing. Some scholars suppose that IPO firms' usage of the IFRS, rather than the domestic GAAP, affects IPO underpricing through two mechanisms: 1) the quality; 2) the comparability of the financial reports. Our study is the first research that studies the impact of the IAS/IFRS on the IPOs underpricing in the Italian stock market. We find that the IFRS adoption is not associated with a decrease in IPO underpricing and that the trend of the financial market is the only factor associated with this phenomenon. Referring to the Italian stock market, our results suggest that the IFRS adoption does not reduce information asymmetries among investors, probably due to the lax of enforcement which seems to characterise the Italian environment.

Keywords: initial public offering; IPO; international financial reporting standards; underpricing; performance; financial market; Italy.

DOI: 10.1504/IJMFA.2018.093458

International Journal of Managerial and Financial Accounting, 2018 Vol.10 No.3, pp.181 - 201

Received: 22 Feb 2017
Accepted: 15 Aug 2017
Published online: 26 Jul 2018 *

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