Political power, local policy uncertainty and IPO pricing

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

*Motsvarande författare för detta arbete

Forskningsoutput: TidskriftsbidragArtikelVetenskapligPeer review

Sammanfattning

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.
OriginalspråkEngelska
Artikelnummer101907
Referentgranskad vetenskaplig tidskriftJournal of corporate finance
Volym67
UtgåvaApril 2021
Sidor (från-till)1-32
Antal sidor32
ISSN0929-1199
DOI
StatusPublicerad - 20.04.2021
MoE-publikationstypA1 Originalartikel i en vetenskaplig tidskrift

Nyckelord

  • 512 Företagsekonomi

Globala mål för hållbar utveckling (SDG)

  • Mål 09: Hållbar industri, innovationer och infrastruktur

Styrkeområden och områden med hög potential (AoS och AoHP)

  • AoS: Finansiering, redovisning och företagsstyrning

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