Political power, local policy uncertainty and IPO pricing

Gonul Colak*, Dimitrios Gounopoulos , Panagiotis Loukopoulos , Georgios Loukopoulos

*Motsvarande författare för detta arbete

Forskningsoutput: TidskriftsbidragArtikelVetenskapligPeer review

10 Citeringar (Scopus)


Greater partisan alignment among lawmakers enhances their ability to respond rapidly to adverse shocks, but it also undermines the quality of checks and balances and encourages excessive governmental intervention in local areas aligned with the ruling party. We investigate how this form of local policy risk affects IPO underpricing. One standard-deviation increase in political alignment between local politicians and the federal government translates into an extra $1.58 million being left on the table, which corresponds to 5.39% of the average valuation discount. This effect is concentrated in firms that are vulnerable to legislative interventions and has important long-term implications. Our robustness analysis also shows that our baseline results are not sensitive to the inclusion/exclusion of influential states and years with high IPO activity.
Referentgranskad vetenskaplig tidskriftJournal of Corporate Finance
NummerApril 2021
Sidor (från-till)1-32
Antal sidor32
StatusPublicerad - 20.04.2021
MoE-publikationstypA1 Originalartikel i en vetenskaplig tidskrift


  • 512 Företagsekonomi

Styrkeområden och områden med hög potential (AoS och AoHP)

  • AoS: Finansiering, redovisning och företagsstyrning


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