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Article: Real Effects of Stock Underpricing

TitleReal Effects of Stock Underpricing
Authors
Hau, HLai, SCS
KeywordsMarket inefficiency
Fire sales
Mutual funds
Investment
Employment
Issue Date2013
PublisherElsevier BV. The Journal's web site is located at http://www.elsevier.com/locate/jfec
Citation
Journal of Financial Economics, 2013, v. 108 n. 2, p. 392-408 How to Cite?
DOI: http://dx.doi.org/10.1016/j.jfineco.2012.11.001
AbstractThis paper provides evidence for a causal effect of equity prices on corporate investment and employment. We use fire sales by distressed equity funds during the 2007–2009 financial crisis to identify substantial exogenous underpricing. Firms whose stocks are most underpriced have considerably lower investment and employment than industry peers not subject to any fire sale discount. The causal effect of underpricing on investment is found to be largely concentrated on the most financially constrained firms.
Persistent Identifierhttp://hdl.handle.net/10722/187617
ISSN
0304-405X
2021 Impact Factor: 8.238
2020 SCImago Journal Rankings: 11.673
SSRN
1965957
ISI Accession Number ID
WOS:000318383200006

 

DC FieldValueLanguage
dc.contributor.authorHau, H-
dc.contributor.authorLai, SCS-
dc.date.accessioned2013-08-21T07:05:20Z-
dc.date.available2013-08-21T07:05:20Z-
dc.date.issued2013-
dc.identifier.citationJournal of Financial Economics, 2013, v. 108 n. 2, p. 392-408-
dc.identifier.issn0304-405X-
dc.identifier.urihttp://hdl.handle.net/10722/187617-
dc.description.abstractThis paper provides evidence for a causal effect of equity prices on corporate investment and employment. We use fire sales by distressed equity funds during the 2007–2009 financial crisis to identify substantial exogenous underpricing. Firms whose stocks are most underpriced have considerably lower investment and employment than industry peers not subject to any fire sale discount. The causal effect of underpricing on investment is found to be largely concentrated on the most financially constrained firms.-
dc.languageeng-
dc.publisherElsevier BV. The Journal's web site is located at http://www.elsevier.com/locate/jfec-
dc.relation.ispartofJournal of Financial Economics-
dc.rightsNOTICE: this is the author’s version of a work that was accepted for publication in Journal of Financial Economics. Changes resulting from the publishing process, such as peer review, editing, corrections, structural formatting, and other quality control mechanisms may not be reflected in this document. Changes may have been made to this work since it was submitted for publication. A definitive version was subsequently published in Journal of Financial Economics, vol 108, issue 2, 2013. DOI: 10.1016/j.jfineco.2012.11.001-
dc.rights© 2012. This manuscript version is made available under the CC-BY-NC-ND 4.0 license http://creativecommons.org/licenses/by-nc-nd/4.0/-
dc.subjectMarket inefficiency-
dc.subjectFire sales-
dc.subjectMutual funds-
dc.subjectInvestment-
dc.subjectEmployment-
dc.titleReal Effects of Stock Underpricing-
dc.typeArticle-
dc.identifier.emailHau, H: prof@haraldhau.com-
dc.identifier.emailLai, SCS: sandy_lai@hku.hk-
dc.identifier.authorityLai, SCS=rp01620-
dc.description.naturepostprint-
dc.identifier.doi10.1016/j.jfineco.2012.11.001-
dc.identifier.scopuseid_2-s2.0-84876346589-
dc.identifier.hkuros220756-
dc.identifier.volume108-
dc.identifier.issue2-
dc.identifier.spage392-
dc.identifier.epage408-
dc.identifier.isiWOS:000318383200006-
dc.publisher.placeNetherlands-
dc.identifier.ssrn1965957-
dc.identifier.issnl0304-405X-

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