Stock Overpricing, Underwriting Fees, and Stock Price Crash Risk

Huizhu Tan; Sailesh Tanna; Shuai Huang; Juncheng Luo

doi:10.1016/j.frl.2025.107781

Stock Overpricing, Underwriting Fees, and Stock Price Crash Risk

Huizhu Tan
, Sailesh Tanna
, Shuai Huang
, Juncheng Luo

Jilin International Studies University
Jilin University

Research output: Contribution to journal › Article › peer-review

Abstract

This paper systematically examines the impact of stock overpricing on stock price crash risk and its underlying mechanism based on data from Shanghai and
Shenzhen A-share listed companies between 2011 and 2023. The research findings
indicate a significant positive correlation between the degree of stock overpricing and stock price crash risk. Furthermore, by examining the mediating effect of underwriter sponsorship fees, the study verifies the pathway through which overpricing indirectly increases risk by raising issuance costs and intensifying conflict of interes.

Original language	English
Article number	107781
Journal	Finance Research Letters
Volume	84
Early online date	15 Jun 2025
DOIs	https://doi.org/10.1016/j.frl.2025.107781
Publication status	Published - Nov 2025

Bibliographical note

Publisher Copyright:
© 2025

Keywords

Stock Overpricing
Underwriting Fees
Stock Price Crash Risk

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10.1016/j.frl.2025.107781

Cite this

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abstract = "This paper systematically examines the impact of stock overpricing on stock price crash risk and its underlying mechanism based on data from Shanghai and Shenzhen A-share listed companies between 2011 and 2023. The research findings indicate a significant positive correlation between the degree of stock overpricing and stock price crash risk. Furthermore, by examining the mediating effect of underwriter sponsorship fees, the study verifies the pathway through which overpricing indirectly increases risk by raising issuance costs and intensifying conflict of interes.",

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AB - This paper systematically examines the impact of stock overpricing on stock price crash risk and its underlying mechanism based on data from Shanghai and Shenzhen A-share listed companies between 2011 and 2023. The research findings indicate a significant positive correlation between the degree of stock overpricing and stock price crash risk. Furthermore, by examining the mediating effect of underwriter sponsorship fees, the study verifies the pathway through which overpricing indirectly increases risk by raising issuance costs and intensifying conflict of interes.

KW - Stock Overpricing

KW - Underwriting Fees

KW - Stock Price Crash Risk

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Stock Overpricing, Underwriting Fees, and Stock Price Crash Risk

Abstract

Bibliographical note

Keywords

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