Determinants of Intellectual Capital Disclosure in the IPOs and Its Impact on Underpricing: Evidence from Indonesia

Abstract

We investigate the determinants of intellectual capital (IC) disclosure in the prospectus of initial public offering (IPO). Going deeper, we also examine the impact of IC disclosure on underpricing. By studying 86 IPOs of Indonesian firms over the period of 2000-2014, we do find that ownership retention and underwriting portion have a positive effect on the extent to which IC is disclosed. Moreover, our results reveal that IC disclosure is negatively correlated with the level of underpricing. In addition, evidence is also found that IC disclosure mediates the link between underwriting portion and underpricing.