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Indiana University Bloomington

Department of Finance

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Research and Publications

Journal Articles

Earnings Quality and International IPO Underpricing

2011, Accounting Review

Thomas J. Boulton, Scott B. Smart, Chad J. Zutter


In this paper we examine the impact of country-level earnings quality on IPO underpricing. Examining 10,783 IPOs from 37 countries, we find that IPOs are underpriced less in countries where public firms produce higher quality earnings information. This finding persists after controlling for other deal- and country-specific factors that affect IPO underpricing, and it is driven neither by the large and relatively transparent markets in the U.S. and U.K. nor by the relatively opaque Japanese market. The impact of going public in a country with relatively low earnings quality is partially offset by the use of a top-tier underwriter.


Bouton, Thomas J., Scott B. Smart, and Chad J. Zutter (2011), "Earnings Quality and International IPO Underpricing," The Accounting Review, Vol. 86, No. 2, March, pp. 483-505.