Anti-Collusion Leniency Programs and the Pricing of IPOs : International Evidence

We provide evidence that anti-collusion leniency legislations around the world reduce IPO underpricing. The effect is amplified (mitigated) among IPOs with more prominent agency concerns (lower level of information asymmetry) and is mitigated in countries with stringent financial reporting regulations and strong external governance mechanisms. Following the passage of the legislations, IPOs have higher float, manifest a stronger link between proceeds raised and post-IPO operating performance, and are more likely to disclose the use of proceeds and to be oversubscribed. Our results are consistent with the view that leniency legislations mitigate informational and agency-related frictions, resulting in less underpriced IPOs