Accounting conservatism and IPO underpricing

The key factor of succses or failure of Initial Public Offering (IPO) is its pricing. Since information asymmetry plays an important role in the IPO, this question arises whether the quality of information is important or not? Accounting conservatism is considered to be one of the factors affecting the quality of accounting information. Hence, this study examines the relationship between accounting conservatism and IPO underpricing in the Tehran Stock Exchange (TSE) during the period of 1382 to 1390. in order to, Multivariate regression has been used to test the hypothesis. Results show that except for the second week of first month after IPO, there is a positive and significant relationship between accounting conservatism and IPO underpricing. Also, the relationship between accounting conservatism and IPO underpricing is more pronounced for firms with high information asymmetry than for firms with low information asymmetry.