This paper develops an information design model to analyze how underwriters strategically disclose firm-specific information prior to equity issuance. The model predicts the existence of discriminatory disclosure: for high-quality firms, the disclosed offering price is positively correlated with firm fundamentals, whereas for low-quality firms, this correlation breaks down. Empirical evidence from China’s stock market under a market-oriented registration system supports this theoretical prediction, based on a proprietary dataset of IPO valuations sourced exclusively from underwriters’ internal pricing reports.
Fan et al. (2026) studied this question.