The Consequences of Directors’ Political Donations for IPO Premium and Performance

Dimitrios Gounopoulos, Khelifa Mazouz, Geoffrey Wood

Research output: Contribution to journalArticlepeer-review


This study explores the effect of directors’ political contributions on IPO valuations and performance. We find that such contributions bring significant benefits to IPO firms. More specifically, we show that the political contributions of board members, particularly those of CEOs and founders, improve both IPO value
and performance (in terms of underpricing and subsequent firm survival). We also find that the impact of directors’ political contributions on the IPO premium and underpricing is particularly strong among nonventure-backed firms, while the link between directors’ political contributions and firm survival is more
pronounced for venture-backed firms with strong corporate governance. Our findings are robust to endogeneity concerns and to alternative measures of political donation and IPO performance. The results confirm the relevance of signaling and resource dependency theories.
Original languageEnglish
Article number101888
JournalJournal of Corporate Finance
Issue number5
Early online date14 Jan 2021
Publication statusPublished - 30 Apr 2021


  • IPO; offer price; political contributions; firm survival; signaling theory, resource dependency theory; political power


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