کد مقاله | کد نشریه | سال انتشار | مقاله انگلیسی | نسخه تمام متن |
---|---|---|---|---|
5093067 | 1478433 | 2017 | 20 صفحه PDF | دانلود رایگان |
- Political money contributions (PMC) mitigate IPO underpricing.
- The strategic targeting of recipient candidates amplifies the effect.
- PMC issuers possess increased bargaining power with lead underwriters.
- There is less discord on the value of such offerings among aftermarket investors.
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.
Journal: Journal of Corporate Finance - Volume 43, April 2017, Pages 19-38