The Impact of COVID-19 Epidemic on IPO Underpricing and the Mediating Mechanisms

Purpose/Significance This research mainly studies the impact of COVID-19 epidemic on Chinese IPO underpricing and the underlying mechanisms, providing reference for IPO pricing, companies and investors’ behaviors. Meanwhile, this research offers suggestions on how the capital market deals with them. Design/Methodology Based on the data on COVID-19 epidemic and IPOs in 2020, this paper examines the impact of the COVID-19 epidemic on the IPO underpricing rate and the mediating mechanism. Conclusions/Findings This paper finds that the COVID-19 epidemic significantly increases the IPO underpricing rate, and the mediating effect is that the uncertainty caused by the COVID-19 epidemic increases people’s “precautionary savings” motivation, thereby increasing the IPO underpricing rate.