Political money contributions of U.S. IPOs

Dimitrios Gounopoulos, Antonios Kallias, Konstantinos Kallias, Panayiotis G. Tzeremes

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    We produce the first study to explore the effect of political money contributions on IPOs. Exploiting a hand-collected database, 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. Investigating the causes in multiple channels, we also associate donor IPOs with negative offer price revisions and lower aftermarket volatility. Collectively, our results offer new empirical grounding to the information asymmetry theory.
    Original languageEnglish
    Pages (from-to)19-38
    JournalJournal of Corporate Finance
    Early online date22 Dec 2016
    Publication statusPublished - 1 Apr 2017


    • initial public offerings
    • IPO underpricing
    • political connections


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