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Oil Price Uncertainty and IPOs

Author

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  • Magnus Blomkvist
  • Nebojsa Dimic
  • Milos Vulanovic

Abstract

We examine the impact of oil price uncertainty on IPO volume in the oil and gas sector. By using the implied volatility of oil options, a forward-looking uncertainty measure, we identify the effect of uncertainty on the going-public decision. Oil price uncertainty exhibits a strong negative relation to IPO volume. A one standard deviation decrease in the implied volatility results in a 29% increase in the number of quarterly IPOs. The effect is concentrated among the price-sensitive upstream producers. We further report that uncertainty positively impacts the IPO withdrawal decision and increases the value of postponing the offering.

Suggested Citation

  • Magnus Blomkvist & Nebojsa Dimic & Milos Vulanovic, 2023. "Oil Price Uncertainty and IPOs," The Energy Journal, , vol. 44(6), pages 21-42, November.
    • Handle: RePEc:sae:enejou:v:44:y:2023:i:6:p:21-42
    DOI: 10.5547/01956574.44.6.mblo
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    References listed on IDEAS

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    Cited by:

    1. Ewing, Bradley T. & Malik, Farooq & Payne, James E., 2024. "Volatility transmission between upstream and midstream energy sectors," International Review of Economics & Finance, Elsevier, vol. 92(C), pages 1191-1199.

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