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The Economic Consequences of Social Unrest: Evidence from Initial Public Offerings
Mr. Philip Barrett
Thomas J. Boulton
Terry D. Nixon
出版
International Monetary Fund
, 2023-11-10
主題
Business & Economics / Economics / Macroeconomics
Business & Economics / Economics / General
ISBN
9798400258978
URL
http://books.google.com.hk/books?id=ILXmEAAAQBAJ&hl=&source=gbs_api
EBook
SAMPLE
註釋
Prior research attributes negative stock market performance following episodes of social unrest to elevated uncertainty. However, social unrest does not solely increase uncertainty, but separately acts to decrease investor sentiment. To determine which effect dominates, we study initial public offering (IPO) underpricing, which responds differently to changes to uncertainty and investor sentiment. Consistent with the notion that social unrest dampens investor sentiment, we find robust evidence that IPO first-day returns are lower during times of greater social unrest. Limits to arbitrage intensify the negative relation between social unrest and underpricing. Notably, strong institutional frameworks mitigate the impact of social unrest on underpricing, suggesting that quality institutions weaken the link between investor sentiment and returns.