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Pension funds and IPO pricing. Evidence from a quasi-experiment

Roszkowska, P. ORCID: 0000-0001-6929-1764, Langer, L. K. & Langer, P. B. (2021). Pension funds and IPO pricing. Evidence from a quasi-experiment. The British Accounting Review, 53(4), article number 100943. doi: 10.1016/


We exploit a quasi-experiment arising from the government-forced changes to the assets under management and investment policy of the Polish pension funds. We test whether this new regulation and its resultant demand shock on the investors' side, leads to changes in the IPO pricing and the subsequent stock's performance. We report material and a statistically significant decrease in the IPO proceeds (IPO size) in the post-treatment period equal to over 107 million PLN (34 million USD). We find no empirical evidence that the treatment had a significant effect on the first-day IPO underpricing or on the long-term underperformance. We conclude that the demand shock resulting from the pension system reform that primarily aimed at solving fiscal problems effectively eliminated the so-called ‘pension premium’ of higher IPO valuations. Thus, it indirectly impaired companies' power of raising money in the public stock market. Furthermore, we report a decrease in the average first-day IPO returns among big issuers that is consistent with the book building literature.

Publication Type: Article
Additional Information: © 2020. This manuscript version is made available under the CC-BY-NC-ND 4.0 license in new tab/window)
Publisher Keywords: IPO pricing, First-day returns, Long-term underperformance, Quasi-experiment, Event study, Pension funds
Subjects: H Social Sciences > HG Finance
Departments: Bayes Business School
Bayes Business School > Finance
SWORD Depositor:
[thumbnail of Pension Funds and IPO Pricing 2020.07.22 - SSRN.pdf]
Text - Accepted Version
Available under License Creative Commons Attribution Non-commercial No Derivatives.

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