Does Direct Listing Mechanism Reduce Underpricing?

Abstract: This paper focuses on direct listing, a newly introduced listing mechanism, and compares the difference between direct listing and IPO in terms of their representative influence on underpricing with empirical study. The result shows that direct listing does help to reduce underpricing. Furthermore, the paper looks into the reason for this difference and comes to the conclusion that the companies' industry sector is the key factor correlating listing mechanism and underpricing.