Management Research Seminar: Global Digital Divide and Capital Markets: The Effect of Internet Penetration on IPO Underpricing

Wednesday, October 18, 2017, 10:00 a.m. to 12:00 p.m.

Chad J. Zutter, PhD
Dean’s Excellence Faculty Fellow
Associate Professor of Finance
Katz Graduate School of Business
University of Pittsburgh

The Internet has the potential to lessen information asymmetry in markets and reduce the cost of information acquisition for market participants. In this study, we investigate the relation between Internet penetration and the outcomes of 14,287 initial public offerings (IPOs) from 36 countries. We find that Internet penetration is negatively correlated with initial returns. The negative relation between Internet penetration and IPO underpricing is stronger in emerging technologies industries. Offer prices are also more precise in countries where more people have access to the Internet. Finally, post-IPO ownership structures tend to be more dispersed in countries with greater Internet penetration for several years after the offering. Together, these findings are consistent with the conjecture that Internet access is associated with reduced information asymmetry among market participants, which results in more efficient allocation of resources.

Wednesday, October 18, 2017
10:00 a.m. to 12:00 p.m.
Telfer School of Management
Desmarais Building
DMS 7170
55 Laurier Avenue East
Ottawa, Ontario K1N 6N5
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About the Speaker

Chad J. Zutter (PhD Indiana University) is the Dean’s Excellence Faculty Fellow and an associate professor of Finance at the Katz Graduate School of Business at the University of Pittsburgh. His research examines corporate finance and capital market events, such as mergers and acquisitions or the determinants of U.S. and international IPO underpricing and valuation. His research has earned awards, including a 2008 Jensen Prize, been featured in top periodicals, such as The Economist, and been consulted by leading companies, such as Google. Chad is also an author of Principles of Managerial Finance, a leading undergraduate corporate finance textbook.

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