Initial Public Offerings and the Firm Location

The firm geographic location matters in IPOs because investors have a strong preference for newly issued local stocks and provide abnormal demand in local offerings. Using equity holdings data for more than 53,000 households, we show the probability to participate to the stock market and the proportion of the equity wealth is abnormally increasing with the volume of the IPOs inside the investor region. Upon nearly the universe of the 167,515 going public and private domestic manufacturing firms, we provide consistent evidence that the isolated private firms have higher probability to go public, larger IPO underpricing cross-sectional average and volatility, and less pronounced long-run under-performance. Similar but opposite evidence holds for the local concentration of the investor wealth. These effects are economically relevant and robust to local delistings, IPO market timing, agglomeration economies, firm location endogeneity, self-selection bias, and information asymmetries, among others. Findings suggest IPO waves have a strong geographic component, highlight that underwriters significantly under-estimate the local demand component thus leaving unexpected money on the table, and support state-contingent but constant investor propensity for risk

The impact of life experiences on risk taking

Introduction to the Special Issue of the Journal of Economic Psychology on "The Impact of Life Experiences on Risk Taking" (Guest Editors: Peter Ayton; Gennaro Bernile; Alessandro Bucciol; Luca Zarri)

Has local informational advantage disappeared?

10.1002/rfe.1046Review of Financial Economics37138-6

International sports and investor sentiment: do national team matches really affect stock market returns?

Ashton et�al. (2003), Edmans et�al. (2007) and Kaplanski and Levy (2010) document abnormal stock market returns on the trading day following international sporting events, particularly soccer. This study examines returns in matching countries and finds that unusual returns also exist in those countries even though their national teams did not play. The evidence shows that national team matches do not affect neutral markets like the matching countries, which implies that sports do not cause unusual returns in either domestic or foreign markets. The results indicate that changes in investor sentiment following international sports matches do not have a significant effect on asset prices.