The Impact of Spatial Organization on Pricing Anomalies
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University of Cincinnati / OhioLINK
2018
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ndltd-OhioLink-oai-etd.ohiolink.edu-ucin15356366516059252021-08-03T07:08:29Z The Impact of Spatial Organization on Pricing Anomalies Karahan, Selcuk Economics Finance Business Administration Geographic Dispersion Location Initial Public Offerings Underpricing Earnings Surprise Post-Earnings Announcement Drift This dissertation consists of two related essays on the impact of spatial organization on pricing anomalies. In Essay I, I investigate the relationship between a firm’s degree of geographic dispersion and its IPO’s first-day return (underpricing). In Essay II, I study the relationship between a firm’s degree of geographic dispersion and the Post-Earnings Announcement Drift.Essay I: Using a measure of geographic dispersion based on the latitude and longitude of each of a firm’s establishments, I investigate the relationship between a firm’s degree of geographic dispersion and its IPO’s first-day return (underpricing). I document that geographically more dispersed firms experience greater IPO underpricing. This pattern is both statistically and economically significant. To the extent that IPO underpricing is exacerbated by informational uncertainty, these results are consistent with the notion that it is more difficult to value a firm as its activities become more physically dispersed. In addition, I show that test based on less precise measures of dispersion (e.g., the number of states a firm does business) are not related to IPO underpricing. Overall, the evidence presented in this study demonstrates that the geographic dispersion level of a firm is a key determinant of IPO underpricing and highlights the economic importance of the spatial distribution of a firm’s operations.Essay II: I investigate the relationship between geographic dispersion of firms and the Post–Earnings Announcement Drift (PEAD) pricing anomaly using a measure of geographic dispersion based on the latitude and longitude of each of a firm’s establishments. I show that PEAD is stronger for geographically more dispersed firms than geographically less dispersed or non-dispersed firms. The results are statistically significant and robust to controlling for factors deemed to affect the drift. These results are consistent with the notion that it is more difficult and costlier to understand firm-specific earnings as the firm’s activities become more physically dispersed. As a result, market participants incorporate geographically dispersed information into prices more slowly. Overall, the evidence presented in this study demonstrates that the geographic dispersion level of a firm plays an important role in explaining Post–Earnings Announcement Drift. 2018-10-18 English text University of Cincinnati / OhioLINK http://rave.ohiolink.edu/etdc/view?acc_num=ucin1535636651605925 http://rave.ohiolink.edu/etdc/view?acc_num=ucin1535636651605925 unrestricted This thesis or dissertation is protected by copyright: all rights reserved. It may not be copied or redistributed beyond the terms of applicable copyright laws. |
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NDLTD |
| language |
English |
| sources |
NDLTD |
| topic |
Economics Finance Business Administration Geographic Dispersion Location Initial Public Offerings Underpricing Earnings Surprise Post-Earnings Announcement Drift |
| spellingShingle |
Economics Finance Business Administration Geographic Dispersion Location Initial Public Offerings Underpricing Earnings Surprise Post-Earnings Announcement Drift Karahan, Selcuk The Impact of Spatial Organization on Pricing Anomalies |
| author |
Karahan, Selcuk |
| author_facet |
Karahan, Selcuk |
| author_sort |
Karahan, Selcuk |
| title |
The Impact of Spatial Organization on Pricing Anomalies |
| title_short |
The Impact of Spatial Organization on Pricing Anomalies |
| title_full |
The Impact of Spatial Organization on Pricing Anomalies |
| title_fullStr |
The Impact of Spatial Organization on Pricing Anomalies |
| title_full_unstemmed |
The Impact of Spatial Organization on Pricing Anomalies |
| title_sort |
impact of spatial organization on pricing anomalies |
| publisher |
University of Cincinnati / OhioLINK |
| publishDate |
2018 |
| url |
http://rave.ohiolink.edu/etdc/view?acc_num=ucin1535636651605925 |
| work_keys_str_mv |
AT karahanselcuk theimpactofspatialorganizationonpricinganomalies AT karahanselcuk impactofspatialorganizationonpricinganomalies |
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1719454623607029760 |