Seasonal Affective Disorder and IPO Underpricing: Updated Evidence
Journal of Neuroscience, Psychology, and Economics, 8, 2(2015), pp. 78–99.
43 Pages Posted: 24 Oct 2013 Last revised: 28 Jun 2015
Date Written: April 10, 2015
Using several proxies for seasonal affective disorder (SAD), we find that SAD negatively affects IPO first trading day return (underpricing) during the 1981-1989 and 1999-2000 periods, but not during the 1990-1998 and 2001-2007 periods. During those periods when SAD affects IPO underpricing, firm exposure mitigates the negative effect of SAD. In addition, over the years 1981-2000, we find a negative effect of SAD on the offer price revision of the IPO during bookbuilding, which suggests pre-market investors adjust for SAD effects during the bookbuilding process.
Keywords: Seasonal Affective Disorder, Seasons, Mood, IPO, Underpricing
JEL Classification: G10, G11, G12
Suggested Citation: Suggested Citation