Digital Sentiment and the Retail Crowd: How Finfluencers Shape IPO Valuations

Document Type

Article

Publication Title

Journal of Behavioral Finance

Abstract

This study investigates how finfluencer endorsements affect initial public offering (IPO) pricing through behavioral attention mechanisms. Analyzing 395 Indian IPOs (2014–2024), we find that finfluencer-backed issues experience significantly higher traditional underpricing and initial returns, driven by salience, herding, and retail investor overreaction. Analyst recommendations yield more moderate effects, consistent with valuation-based anchoring. Robustness checks using Gaussian mixture model (GMM) and Bayesian bootstrapping confirm the causal role of social media engagement. Results reveal a hierarchy of influence, with macro-level finfluencers driving the strongest behavioral distortions. The study contributes to behavioral finance by identifying finfluencer sentiment as a novel attention-based pricing channel in contemporary capital markets.

DOI

10.1080/15427560.2025.2566736

Publication Date

1-1-2025

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