Oil Price Uncertainty and IPOs

Magnus Blomkvist, Nebojsa Dimic and Milos Vulanovic

The Energy Journal, 2023, vol. 44, issue 6, 21-42

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.

Keywords: Energy economics; IPOs; Implied crude oil volatility; Oil and gas sector; Oil price uncertainty (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:sae:enejou:v:44:y:2023:i:6:p:21-42

DOI: 10.5547/01956574.44.6.mblo

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