Nonmarket Signals: Investment in Corporate Political Activity and the Performance of Initial Public Offerings
| Autor: | Jason Cavich, Bruce C. Rudy |
|---|---|
| Rok vydání: | 2017 |
| Předmět: |
Finance
business.industry 05 social sciences Perspective (graphical) Nonmarket forces Accounting 06 humanities and the arts 0603 philosophy ethics and religion Investment (macroeconomics) Information economics Politics 0502 economics and business Business Management and Accounting (miscellaneous) 060301 applied ethics business Initial public offering 050203 business & management Social Sciences (miscellaneous) |
| Zdroj: | Business & Society. 59:419-438 |
| ISSN: | 1552-4205 0007-6503 |
| DOI: | 10.1177/0007650317717263 |
| Popis: | Research on firm initial public offering (IPO) performance has primarily utilized an economics of information perspective, which assumes that publicly available information is incorporated into a stock’s price when it is issued. However, the valuation process associated with IPOs remains manifest with considerable uncertainty for the prospective investor. This study argues that corporate political activity undertaken prior to the firm’s IPO acts as a signal to investors, reducing the uncertainty the market places on the value of the firm’s equity. Utilizing a sample of 180 IPOs, we show that the more a firm invests in corporate political activity prior to its IPO, the better its IPO performance. These findings provide evidence that corporate political activity acts as a nonmarket signal, influencing investor behavior by reducing the information asymmetries between investors and the target firm. |
| Databáze: | OpenAIRE |
| Externí odkaz: |
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