Abstract
We produce the first study to explore the effect of political money contributions on IPO valuation. Drawing evidence from the U.S., we show that both lobbying and PAC expenditure pay off on issue day as donors incur less underpricing, an effect that can be amplified by contribution size and strategic targeting of recipients. Donor IPOs also experience negative offer price revisions and lower aftermarket volatility. Collectively, our results offer new empirical grounding to information asymmetry and bookbuilding theories.
Original language | English |
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Pages (from-to) | 19 - 38 |
Number of pages | 20 |
Journal | Journal of Corporate Finance |
Volume | 43 |
Issue number | 1-2 |
Early online date | 22 Dec 2016 |
DOIs | |
Publication status | Published - 30 Apr 2017 |
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Dimitrios Gounopoulos
- Management - Professor
- Accounting, Finance & Law
Person: Research & Teaching