Political uncertainty and IPO activity: evidence from U.S. gubernatorial elections

Çolak, Gönül, Durnev, Art and Qian, Yiming (2017) Political uncertainty and IPO activity: evidence from U.S. gubernatorial elections. Journal of Financial and Quantitative Analysis, 52 (6). pp. 2523-2564. ISSN 0022-1090

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Abstract

We analyze initial public offering (IPO) activity under political uncertainty surrounding gubernatorial elections in the United States. There are fewer IPOs originating from a state when it is scheduled to have an election. To establish identification, we develop a neighboring-states method that uses bordering states without elections as a control group. The dampening effect of elections on IPO activity is stronger for firms with more concentrated businesses in their home states, firms that are more dependent on government contracts (particularly state contracts), and harder-to-value firms. This dampening effect is related to lower IPO offer prices (hence, higher costs of capital) during election years.

Item Type: Article
Schools and Departments: University of Sussex Business School > Accounting and Finance
SWORD Depositor: Mx Elements Account
Depositing User: Mx Elements Account
Date Deposited: 22 Feb 2022 09:29
Last Modified: 22 Feb 2022 10:39
URI: http://sro.sussex.ac.uk/id/eprint/104492

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