IPO underperformance and financial inclusion in the COVID-19 pandemic

Abstract

Abstract IPOs (Initial Public Offering) are relevant as a mean of raising external funds to finance growth by investment firms that do not generate sufficient internal cash flows. This study analyzes the relationship between COVID-19 short-term IPO underperformance, ownership structure, liquidity and financial inclusion. The results of the simple regression of stock market return of 11 new French IPO introduced one year before the pandemic for three years 2019-2020-2021 shows that the ownership concentration reduces underpricing of IPO firms. In the whole sample two years after the pandemic underpricing is reduced due to ownership concentration preserving and high initial liquidity. In all times period financial inclusion reduces underpricing of IPO firms.