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

Şenay Açıkgöz and Cem Onur Karatas
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Şenay Açıkgöz: Independent Researcher
Cem Onur Karatas: Adelphi University

Business and Economics Research Journal, 2024, vol. 15, issue 4, 331-354

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.

Keywords: Economic Policy Uncertainty; IPOs; VAR; Impulse-responses; Regime Change (search for similar items in EconPapers)
JEL-codes: C22 C32 G10 G38 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:ris:buecrj:0670

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