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Local Economic Spillover Effects of Stock Market Listings

Published online by Cambridge University Press:  07 March 2019

Alexander W. Butler ,
Larry Fauver  and
Ioannis Spyridopoulos Open the ORCID record for Ioannis Spyridopoulos [Opens in a new window]
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Abstract

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We show that initial public offerings (IPOs) have nontrivial positive spillover effects on local labor markets, business environments, consumer spending, real estate, and migration. We mitigate endogeneity concerns about unobserved heterogeneity with restrictive geographic fixed effects coupled with a matching procedure. We show that it is the listing decision, which encompasses both a wealth and liquidity shock, that induces economic spillovers. Conditional on an IPO occurring, we estimate that an additional $10 million in IPO proceeds is associated with an extra 41 jobs and 0.7 new establishments locally.

Type
Research Article
Information
Journal of Financial and Quantitative Analysis , Volume 54 , Issue 3 , June 2019 , pp. 1025 - 1050
Copyright
Copyright © Michael G. Foster School of Business, University of Washington 2019 

Footnotes

1

Without implicating them, we thank Dan Bradley, Jamie Brown, Lee Ann Butler, Deborah Fauver, Yianni Floros, Zoran Ivkovich, Paul Malatesta (the editor), Andy Naranjo, Jay Ritter (the referee), seminar participants at the NYSE, Iowa State University, Rice University, Baylor University, Vanderbilt University, University of Texas at El Paso, University of Tennessee, Cal Poly, University of Florida, Texas Tech University, University of Alabama, the 2016 PNC University of Kentucky Finance Conference, 2016 Financial Management Association doctoral student consortium, the 2018 Midwest Finance Association conference, the 2018 Eastern Finance Association conference, the 2018 U.S. Securities and Exchange Commission conference, and the 2018 Southern Finance Association conference for helpful comments. We thank Michael McDonald for contributions on an earlier draft. Any errors are ours.

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