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Macroeconomic uncertainty, the option to wait and IPO issue cycles

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  • Nguyen Thanh, Binh

Abstract

This paper uses the macroeconomic uncertainty measure proposed by Jurado, Ludvigson, and Ng (2015) to explain the U.S. Initial Public Offering (IPO) issue cycles. Controlling for a large set of variables, time series estimations reveal a strong and robust negative impact of macroeconomic uncertainty on the IPO activity. An increase in macroeconomic uncertainty by one standard deviation lowers the number of monthly IPOs by roughly four in the long-run. Both the reduction of the number of IPO filings and the rise of withdrawn IPOs contribute to the lower number of IPOs in response to an uncertainty shock

Suggested Citation

  • Nguyen Thanh, Binh, 2020. "Macroeconomic uncertainty, the option to wait and IPO issue cycles," Finance Research Letters, Elsevier, vol. 32(C).
    • Handle: RePEc:eee:finlet:v:32:y:2020:i:c:s1544612318303854
    DOI: 10.1016/j.frl.2019.01.012
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    Cited by:

    1. Demir, Ender & García-Gómez, Conrado Diego & Díez-Esteban, José María & Farinha, Jorge Bento, 2023. "How does uncertainty impact IPO activity? International evidence," Finance Research Letters, Elsevier, vol. 58(PC).
    2. Helbing, Pia & Lucey, Brian M. & Vigne, Samuel A., 2019. "The determinants of IPO withdrawal – Evidence from Europe," Journal of Corporate Finance, Elsevier, vol. 56(C), pages 415-436.
    3. Xiao, Jihong & Wang, Yudong, 2022. "Macroeconomic uncertainty, speculation, and energy futures returns: Evidence from a quantile regression," Energy, Elsevier, vol. 241(C).
    4. Lefebvre, Vivien, 2023. "The growth process of IPO firms," Journal of Business Venturing Insights, Elsevier, vol. 19(C).

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    More about this item

    Keywords

    Macroeconomic uncertainty; IPO issue cycles; Hot and cold markets; Real options effect;
    All these keywords.

    JEL classification:

    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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