The world cup in football and the US IPO market |
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| Affiliation: | 1. Oslo Business School, Oslo Metropolitan University, Pilestredet 46, Oslo 0130, Norway;2. School of Accountancy, Jiangxi University of Finance and Economics, Nanchang, Jiangxi, China;3. Faculty of Business and Economics, the University of Melbourne, Melbourne, VIC, Australia;4. The Arctic University of Norway, Hansine Hansens veg 18, Tromsø N-9019, Norway;5. College of Business and Economics, Australian National University, Canberra, ACT, Australia;1. Central Bank of Chile, Agustinas 118, 8340454 Santiago, Chile;2. Hunter College & Graduate Center, City University of New York, 695 Park Ave, New York NY 10065, United States;1. Department of Accounting, Antai College of Economics and Management, Shanghai Jiao Tong University, 1954 Huashan Road, Shanghai, 200030, China;2. Department of Accounting, Business School, National University of Singapore, Mochtar Riady Building, BIZ 1, # 07-30, 15 Kent Ridge Drive, 119245, Singapore;3. Institute of Accounting and Finance, Shanghai University of Finance and Economics, No.777 Guoding Road, Shanghai 200433, China |
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| Abstract: | We document that US IPOs that take place during a world cup in football (soccer), compared to IPOs before or after, exhibit 9% lower underpricing and 6% lower price adjustment. IPOs during world cups receive less attention from foreign investors and exhibit significantly higher long-run returns. Our results are robust to excluding the IPO bubble period of 1999 and 2000, including only listings during summer months, controlling for overall market sentiment and market conditions, and to using various matched samples of non-world cup IPOs. Firm characteristics of world cup IPOs are indistinguishable from those of non-world cup IPOs, suggesting that selection is not driving the results. Consistent with prior studies showing that world cups affect market sentiment, we show that this extends to US IPOs, where lower sentiment, driven by foreign investors, leads to reduced investor attention and lower valuations. |
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