Abstract
This study examines the role of sponsor representatives in SEO underpricing using a sample of private placements issued by Chinese firms covering the period 2007–2021. We find a robust negative relationship between private placement underpricing and qualified sponsor representatives who recommend the private placements, indicating that sponsor representatives provide high-quality services and in turn enhance the pricing efficiency of private placement market. This relationship is more pronounced for private placement issues that have higher financial distress, greater information asymmetry, and are located in weaker business environment. And the role of sponsor representatives is enhanced after China's registration system reform and issue-pricing rules revision.
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