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Economic Policy Uncertainty and Fluctuations in Monthly IPO Volume: Evidence from the US

Author

Listed:
  • Açıkgöz, Şenay

    (Independent Researcher)

  • Karatas, Cem Onur

    (Adelphi University)

Abstract

This research examines the dynamic relationship between economic policy uncertainty (EPU) and initial public offering (IPO) volume in the United States from 1990 to 2020. Employing time-series econometric methods, we find that EPU has a significant negative effect on IPO activities. According to impulse responses, the number of IPOs significantly reacts to the innovations on EPU within the next 1 to 4 months and approaches the new equilibrium in 6 to 8 months. However, EPU does not contribute to forecast error variance decompositions of the number of IPOs. Our empirical results also show that the number of IPOs switches between low-mean/high-variance and high-mean/low-variance regimes. The results have some useful implications for timing IPOs in terms of economic policy uncertainty.

Suggested Citation

  • Açıkgöz, Şenay & Karatas, Cem Onur, 2024. "Economic Policy Uncertainty and Fluctuations in Monthly IPO Volume: Evidence from the US," Business and Economics Research Journal, Uludag University, Faculty of Economics and Administrative Sciences, vol. 15(4), pages 331-354, October.
    • Handle: RePEc:ris:buecrj:0670
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    More about this item

    Keywords

    Economic Policy Uncertainty; IPOs; VAR; Impulse-responses; Regime Change;
    All these keywords.

    JEL classification:

    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation

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