U.S. banks’ IPOs and political money contributions

Maria Eleni K. Agoraki, Dimitrios Gounopoulos, Georgios P. Kouretas

Research output: Contribution to journalArticlepeer-review

2 Citations (SciVal)


This study analyses the effect of political money contributions on U.S. banks’ IPOs. We employ unbalanced panel data of 367 U.S. banks’ IPOs for the period January 1998 to December 2019. Our findings reveal that investors perceive Political Money Contributions (PMC) by U.S. banks as a proxy for political reach and connectedness. We document an inverse relationship between total PMC and the level of underpricing, which implies that both lobbying and PAC expenditure pay off on issue day as donors incur less underpricing. Initial returns decrease with PAC contributions to House of Representatives candidates, whereas the returns relate to the partisan identity of the candidates receiving PAC contributions. We document that those individual contributions by directors bring significant benefits to the IPO banks. Finally, we show that the political contributions of board members, particularly those of CEOs and founders, are associated with better returns in the long term.

Original languageEnglish
Article number101058
JournalJournal of Financial Stability
Early online date29 Jul 2022
Publication statusPublished - 31 Dec 2022


  • Initial public offerings
  • IPO underpricing
  • Lobbying
  • Political connections

ASJC Scopus subject areas

  • Finance
  • Economics, Econometrics and Finance(all)


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