Local Economic Consequences of Stock Market Listings

Political Uncertainty and IPO Activity: Evidence from U.S. Gubernatorial Elections

“…Similarly, for Tobit regressions, the reduction in the number of IPOs is 18% (= −0.86/4.86, where −0.86 is the regression coefficient in specification 6). Butler et al (2015) estimate that an IPO increases the local metropolitan statistical area's per capita income by 2% over the next year. Thus, an 18% (or 0.86 IPOs) drop in the number of local IPOs during the election year is expected to reduce the per capita income by 1.72% for the year following the election.…”

“…An active IPO market helps with the continued growth of these companies and, therefore, helps with the continued growth of aggregate employment. In addition, IPOs can have spillover effects to local economies through employment and ownership of stock by local investors (Butler, Fauver, and Spyridopoulos (2015)), through information externalities (Badertscher, Shroff, and White (2013)), or through supply chain (Kutsuna, Smith, Smith, and Yamada (2016) economic environment that firms operate in (Peltzman (1987)). State policy changes can directly (e.g., through tax code or subsidy policies) or indirectly (through customer demand or sentiment) affect firms' future profitability (Chhaochharia, Korniotis, and Kumar (2012)).…”

Political power, local policy uncertainty and IPO pricing

“…Perhaps more importantly, prior studies of politics and finance have mostly focused on large, established corporations, thus giving far less attention to small, young, fast-growing, entrepreneurial firms such as those conducting initial public offerings (IPOs). Given the crucial role of political institutions in stimulating or hindering entrepreneurial growth (Doidge et al, 2017;Dambra et al, 2015;Butler et al, 2019), this paper contributes to the extant literature by studying whether and how the concentration of legislative power within the U.S.…”

Political Uncertainty and IPO Activity: Evidence from U.S. Gubernatorial Elections

“…An active IPO market helps with the continued growth of these companies and, therefore, helps with the continued growth of aggregate employment. In addition, IPOs can have spillover effects to local economies through employment and ownership of stock by local investors (Butler, Fauver, and Spyridopoulos (2015)), through information externalities (Badertscher, Shroff, and White (2013)), or through supply chain (Kutsuna, Smith, Smith, and Yamada (2016)).…”