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Scientific article
Open access
French

Real effects of stock underpricing

ContributorsHau, Harald; Lai, Sandy
Published inJournal of financial economics, vol. 108, p. 392-408
Publication date2013
Abstract

This 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 under- priced have considerably lower investment an d employment than industry peers not subject to any fire sale discount. The causal effect of underpric ing on investment is found to be largely concentrated on the most financially constrained firms.

Keywords
  • Market inefficiency
  • Fire sales
  • Mutual fund
  • Investment Employment
Citation (ISO format)
HAU, Harald, LAI, Sandy. Real effects of stock underpricing. In: Journal of financial economics, 2013, vol. 108, p. 392–408.
Main files (1)
Article (Published version)
accessLevelPublic
Identifiers
  • PID : unige:85434
ISSN of the journal0304-405X
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