Abstract
Based on a sample of 1,656 IPOs in the Chinese stock market from 2009 to 2022, this paper provides evidence that an increase in economic policy uncertainty (EPU) significantly reduces the level of IPO underpricing. In addition, by decomposing IPO underpricing, we find that this effect is driven by both primary and secondary markets. Finally, subsample regressions show that EPU significantly decreases primary (secondary) market underpricing for companies underwritten by the top 10 (non-top 10) underwriters.
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