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The Economic Consequences of Social Unrest: Evidence from Initial Public Offerings / Philip Barrett, Thomas Boulton, Terry Nixon.
- Format:
- Book
- Government document
- Author/Creator:
- Barrett, Philip.
- Series:
- IMF Working Papers; Working Paper ; No. 2023/232
- IMF Working Papers
- Language:
- English
- Physical Description:
- 1 online resource (52 pages)
- Other Title:
- Economic Consequences of Social Unrest
- Place of Publication:
- Washington, D.C. : International Monetary Fund, 2023.
- Summary:
- 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.
- Notes:
- Description based on print version record.
- ISBN:
- 9798400259630
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