Democracy and the pricing of initial public offerings around the world

Huu Nhan Duong, Abhinav Goyal, Vasileios Kallinterakis, Madhu Veeraraghavan

Research output: Contribution to journalArticleResearchpeer-review

14 Citations (Scopus)


We find a negative relation between democracy and initial public offering (IPO) underpricing for a sample of 23,050 IPOs across 45 countries. The effect of democracy on underpricing is weaker for IPOs audited by Big 4 auditing firms, backed by venture capital firms, and with better disclosure specificity of use of proceeds. Democracy exerts a larger influence on underpricing for firms with higher agency problems, in countries with weaker institutional quality or shareholder protection, and during periods of high investor sentiment or economic policy uncertainty. Overall, our results highlight the importance of democracy in reducing IPO underpricing around the world.

Original languageEnglish
Pages (from-to)322-341
Number of pages20
JournalJournal of Financial Economics
Issue number1
Publication statusPublished - Jul 2022


  • Corporate governance
  • Democracy
  • Information asymmetry
  • IPO underpricing

Cite this