|
Does Disclosure Regulation Work? Evidence from International IPO Markets
Charles Shi,
Univeristy of California at Irvine
Kuntara Pukthuanthong, San Diego State University
Thomas Walker, Concordia University
ABSTRACT. The economic consequences of disclosure regulation have been the subject of much debate. This study contributes to the debate by examining the informational effect of disclosure regulation and the extent to which the disclosure effect is altered by country-specific institutional factors in the context of international IPO markets. Our empirical analysis uses a unique sample of 6,025 IPOs from 34 countries over the period from 1995 to 2002. We show for the first time that the stringency of disclosure requirements for IPO prospectuses is negatively associated with the extent of IPO underpricing, after controlling for various country- and firm-level determinants of underpricing. Moreover, we find that the mandatory disclosure effect is significantly smaller in countries with strong auditing regimes, suggesting that auditor quality and disclosure regulation are substitutes for resolving information asymmetry in the IPO market. On the other hand, we find no evidence that the extent of
Full-Text is no longer available online. Please contact the author(s) for more information about this manuscript.
Back to Session Listing
|