Proceedings of the International Workshop on Navigating the Digital Business Frontier for Sustainable Financial Innovation (ICDEBA 2024)

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A Study on the Impact of Investor Sentiment on Initial Public Offering Underpricing

Authors
Chuanhui Lin1, *
1School of Economics, Shandong University of Finance and Economics, Shandong, 250014, China
*Corresponding author. Email: tam3667@email.phoenix.edu
Corresponding Author
Chuanhui Lin
Available Online 24 February 2025.
DOI
10.2991/978-94-6463-652-9_15How to use a DOI?
Keywords
IPO Underpricing; Investor Sentiment; Stock Market
Abstract

The phenomenon of Initial Public Offering underpricing is present in nearly every country or region with a stock market. To explain this occurrence, Western scholars have proposed a range of theoretical hypotheses, though these theories often have weak explanatory power and exhibit certain limitations. As research in behavioral finance has deepened, scholars have found that investor sentiment is a key factor influencing IPO underpricing. This paper provides a detailed analysis of the definition and measurement methods of investor sentiment, summarizes the fundamental concepts and traditional theoretical explanations of IPO underpricing, and incorporates extensive empirical studies to demonstrate how investor sentiment impacts the degree of IPO underpricing. The research reveals that high investor sentiment typically leads to greater IPO underpricing, whereas low sentiment may decrease underpricing. This paper also reviews existing research findings and outlines current limitations, proposing possible future research directions. It suggests that to better understand and predict IPO underpricing, future studies must account for the dynamics of investor sentiment in varying market environments.

Copyright
© 2025 The Author(s)
Open Access
Open Access This chapter is licensed under the terms of the Creative Commons Attribution-NonCommercial 4.0 International License (http://creativecommons.org/licenses/by-nc/4.0/), which permits any noncommercial use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license and indicate if changes were made.

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Volume Title
Proceedings of the International Workshop on Navigating the Digital Business Frontier for Sustainable Financial Innovation (ICDEBA 2024)
Series
Advances in Economics, Business and Management Research
Publication Date
24 February 2025
ISBN
978-94-6463-652-9
ISSN
2352-5428
DOI
10.2991/978-94-6463-652-9_15How to use a DOI?
Copyright
© 2025 The Author(s)
Open Access
Open Access This chapter is licensed under the terms of the Creative Commons Attribution-NonCommercial 4.0 International License (http://creativecommons.org/licenses/by-nc/4.0/), which permits any noncommercial use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license and indicate if changes were made.

Cite this article

risenwbib
TY  - CONF
AU  - Chuanhui Lin
PY  - 2025
DA  - 2025/02/24
TI  - A Study on the Impact of Investor Sentiment on Initial Public Offering Underpricing
BT  - Proceedings of the International Workshop on Navigating the Digital Business Frontier for Sustainable Financial Innovation (ICDEBA 2024)
PB  - Atlantis Press
SP  - 149
EP  - 157
SN  - 2352-5428
UR  - https://doi.org/10.2991/978-94-6463-652-9_15
DO  - 10.2991/978-94-6463-652-9_15
ID  - Lin2025
ER  -