Financial institution IPOs and regulatory environments

Robert N. Killins, Thanh Ngo and Hongxia Wang

Finance Research Letters, 2022, vol. 46, issue PB

Abstract: We examine underpricing and long term performance of financial institution IPOs around major regulatory changes and during the balance of political power in the United States. We find higher underpricing and lower long term performance post Riegle-Neal Interstate banking, Financial Services Modernization, and Dodd-Frank Acts, supporting the Regulatory Burden hypothesis that investors account for incremental regulation-related costs in their investment decisions. We document less underpricing and better long-term performance during the Democratic balance of power, but more underpricing and lower long-term performance during the Republican balance of power. This study provides important insights for investors, financial institutions, and regulators.

Keywords: Financial institution IPOs; Underpricing; Long-term performance; Regulations; Balance of power (search for similar items in EconPapers)
JEL-codes: G11 G24 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:46:y:2022:i:pb:s1544612321004785

DOI: 10.1016/j.frl.2021.102503

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