Nonmarket Signals: Investment in Corporate Political Activity and the Performance of Initial Public Offerings
研究企业上市前政治活动投资对IPO绩效的影响，发现投资越多，IPO表现越好，这种活动作为非市场信号减少了投资者与企业间的信息不对称。
Research on firm initial public offering (IPO) performance has primarily utilized an economics of information perspective, which assumes that publicly available information is incorporated into a stock’s price when it is issued. However, the valuation process associated with IPOs remains manifest with considerable uncertainty for the prospective investor. This study argues that corporate political activity undertaken prior to the firm’s IPO acts as a signal to investors, reducing the uncertainty the market places on the value of the firm’s equity. Utilizing a sample of 180 IPOs, we show that the more a firm invests in corporate political activity prior to its IPO, the better its IPO performance. These findings provide evidence that corporate political activity acts as a nonmarket signal, influencing investor behavior by reducing the information asymmetries between investors and the target firm.