Newcastle University Business School

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Political money contributions of U.S. IPOs

Newcastle University Business School’s Professor Dimitrius Gounopoulos has recently had the first study which explores the effect of political money contributions on Initial Public Offerings (IPO) published in the 4* Journal of Corporate Finance.

While IPOs are often issued by smaller, younger companies seeking capital to expand, Professor Dimitrius Gounopoulos' research focuses on large privately owned companies looking to become publicly traded.

Exploiting a hand-collected database, the research shows that both lobbying and Political Action Committee expenditure pay off on issue day as donors incur less under-pricing. Which is an effect that can be amplified by contribution size and strategic targeting of recipients. Investigating the causes in multiple channels, the paper also associates donor IPOs with negative offer price revisions and lower aftermarket volatility.

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published on: 8 February 2017