Voluntary Disclosure with Informed Trading in the IPO Market

Praveen Kumar, Nisan Langberg, K. Sivaramakrishnan

Research output: Contribution to journalArticlepeer-review

10 Scopus citations


We examine voluntary disclosure and capital investment by an informed manager in an initial public offering (IPO) in the presence of informed and uninformed investors. We find that in equilibrium, disclosure is more forthcoming—and investment efficiency is lower—when a greater fraction of the investment community is already informed. Moreover, managers disclose more information when the likelihood of an information event is higher, more equity is issued, or the cost of information acquisition is lower. Investment efficiency and the expected level of underpricing are non-monotonic in the likelihood that the manager is privately informed.

Original languageEnglish
Pages (from-to)1365-1394
Number of pages30
JournalJournal of Accounting Research
Issue number5
StatePublished - 1 Dec 2016
Externally publishedYes


  • G14
  • G23
  • G32
  • IPO markets
  • informed trading
  • private information
  • real investment
  • underpricing


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