earticle

영어

In general, the dividend-signaling hypothesis assumes a positive relationship between dividend changes and the price reaction to these changes, or a positive relationship between dividend changes and future firm earnings. This study discusses the effect of pre-listing dividends on IPO underpricing. If the dividend signaling effect exists in Chinese capital markets, there is likely a negative relationship between pre-listing dividends and IPO underpricing. We test the hypothesis using samples collected from Chinese IPO markets from 2009 to 2017. The empirical test results are as follows. First, offering size, period from subscription date to listing date, company size and age, debt ratio, ROE, and lot winning rate significantly influence IPO underpricing. Second, companies that do not pay any pre-IPO dividends display a more serious degree of underpricing, but companies that pay more frequent pre-listing dividends can alleviate the information asymmetry problem and reduce IPO underpricing. Even more surprising, dividends paid two or three years before listing have a negative impact on IPO underpricing, but those paid one year before listing have no influence. Third, we investigated companies that pay dividends only prior to the public offering and those that paid consistent dividends before the IPO separately. The empirical results revealed that dividend payments of those companies that paid consistent dividends have a negative impact on IPO underpricing, but those of companies that pay dividends only prior to the public offering have more severe underpricing. In other words, companies that do not pay consistent dividends before listing issued a lower offer price and paid dividends prior to the public offering for the uncertainty of IPOs. By reviewing both classic and recent literature, we consider that our many-sided discussions on the dividend-signaling hypothesis and IPO underpricing contribute to related future research in this field.