How does uncertainty impact IPO activity? International evidence

Abstract

This paper examines the impact of economic uncertainty on IPO activity in 52 countries. Using a dataset of 70,760 IPOs from 1990 to 2021, we find that economic uncertainty (proxied by the World Uncertainty Index) has a negative effect on IPO activity (both IPO count and proceeds). Additionally, we show that a country's institutional quality, characterized using the World Governance Indicators, alleviates the negative effect of uncertainty on IPO activity. These findings are robust to alternative model specifications. Relevant policy implications are also provided.