Idiosyncratic risk disclosure of <scp>IPO</scp> firms and institutional investors' withdrawals

Abstract Using data from 2226 IPO firms over the 2007–2020 period, this study investigates whether and how the idiosyncratic risk disclosure of IPO firms impacts institutional investor behaviour. The findings suggest that institutional investors are more likely to withdraw their share subscriptions when IPO companies disclose less idiosyncratic risk information. The heterogeneous effect of idiosyncratic risk disclosure is explored, revealing that this negative effect is significantly pronounced for non‐SOEs. Additionally, the divergence in bidding among institutions is less pronounced when issuers disclose more idiosyncratic risk information. Furthermore, companies with fewer idiosyncrasies of risk information exhibit poorer long‐term post‐IPO performance.