Accounting conservatism and IPO underpricing: China evidence

Zhijun LIN; Zhimin Tian

doi:10.1016/j.intaccaudtax.2012.07.003

Accounting conservatism and IPO underpricing: China evidence

Zhijun LIN^*, Zhimin Tian

^*Corresponding author for this work

Research output: Contribution to journal › Journal article › peer-review

32 Citations (Scopus)

Abstract

This study examines how accounting conservatism impacts underpricing of initial public offerings (IPOs) in the Chinese stock market. In addition, we investigate how information asymmetry affects the association of accounting conservatism with IPO underpricing. Based on regression analysis of 674 A-shares companies that went public through IPOs at both Shanghai and Shenzhen Stock Exchanges in China during 2001-2009, we find that (1) accounting conservatism is negatively associated with the magnitude of IPO underpricing; and (2) the relationship between accounting conservatism and IPO underpricing is more pronounced when information asymmetry is high. The findings should shed a light on what drives IPO underpricing and how it could be affected by accounting conservatism in an emerging economy.

Original language	English
Pages (from-to)	127-144
Number of pages	18
Journal	Journal of International Accounting, Auditing and Taxation
Volume	21
Issue number	2
DOIs	https://doi.org/10.1016/j.intaccaudtax.2012.07.003
Publication status	Published - 2012

Scopus Subject Areas

Accounting
Finance

User-Defined Keywords

Accounting conservatism
Chinese accounting
Information asymmetry
IPO in China
IPO underpricing

Access to Document

10.1016/j.intaccaudtax.2012.07.003

Cite this

@article{8f6f2008fb89420d8a7442cb5f011001,

title = "Accounting conservatism and IPO underpricing: China evidence",

abstract = "This study examines how accounting conservatism impacts underpricing of initial public offerings (IPOs) in the Chinese stock market. In addition, we investigate how information asymmetry affects the association of accounting conservatism with IPO underpricing. Based on regression analysis of 674 A-shares companies that went public through IPOs at both Shanghai and Shenzhen Stock Exchanges in China during 2001-2009, we find that (1) accounting conservatism is negatively associated with the magnitude of IPO underpricing; and (2) the relationship between accounting conservatism and IPO underpricing is more pronounced when information asymmetry is high. The findings should shed a light on what drives IPO underpricing and how it could be affected by accounting conservatism in an emerging economy.",

keywords = "Accounting conservatism, Chinese accounting, Information asymmetry, IPO in China, IPO underpricing",

author = "Zhijun LIN and Zhimin Tian",

year = "2012",

doi = "10.1016/j.intaccaudtax.2012.07.003",

language = "English",

volume = "21",

pages = "127--144",

journal = "Journal of International Accounting, Auditing and Taxation",

issn = "1061-9518",

publisher = "Elsevier BV",

number = "2",

}

TY - JOUR

T1 - Accounting conservatism and IPO underpricing

T2 - China evidence

AU - LIN, Zhijun

AU - Tian, Zhimin

PY - 2012

Y1 - 2012

N2 - This study examines how accounting conservatism impacts underpricing of initial public offerings (IPOs) in the Chinese stock market. In addition, we investigate how information asymmetry affects the association of accounting conservatism with IPO underpricing. Based on regression analysis of 674 A-shares companies that went public through IPOs at both Shanghai and Shenzhen Stock Exchanges in China during 2001-2009, we find that (1) accounting conservatism is negatively associated with the magnitude of IPO underpricing; and (2) the relationship between accounting conservatism and IPO underpricing is more pronounced when information asymmetry is high. The findings should shed a light on what drives IPO underpricing and how it could be affected by accounting conservatism in an emerging economy.

AB - This study examines how accounting conservatism impacts underpricing of initial public offerings (IPOs) in the Chinese stock market. In addition, we investigate how information asymmetry affects the association of accounting conservatism with IPO underpricing. Based on regression analysis of 674 A-shares companies that went public through IPOs at both Shanghai and Shenzhen Stock Exchanges in China during 2001-2009, we find that (1) accounting conservatism is negatively associated with the magnitude of IPO underpricing; and (2) the relationship between accounting conservatism and IPO underpricing is more pronounced when information asymmetry is high. The findings should shed a light on what drives IPO underpricing and how it could be affected by accounting conservatism in an emerging economy.

KW - Accounting conservatism

KW - Chinese accounting

KW - Information asymmetry

KW - IPO in China

KW - IPO underpricing

UR - http://www.scopus.com/inward/record.url?scp=84865824100&partnerID=8YFLogxK

U2 - 10.1016/j.intaccaudtax.2012.07.003

DO - 10.1016/j.intaccaudtax.2012.07.003

M3 - Journal article

AN - SCOPUS:84865824100

SN - 1061-9518

VL - 21

SP - 127

EP - 144

JO - Journal of International Accounting, Auditing and Taxation

JF - Journal of International Accounting, Auditing and Taxation

IS - 2

ER -

Accounting conservatism and IPO underpricing: China evidence

Abstract

Scopus Subject Areas

User-Defined Keywords

Access to Document

Other files and links

Fingerprint

Cite this