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Local IPOs and household stock market participation

Author

Listed:
  • Feng Jiang
  • Michelle Lowry
  • Yiming Qian

Abstract

The decrease in companies going public has received widespread attention, and the associated costs are widely debated. We document that high local initial public offering (IPO) activity leads to increases in stock market participation of 5–6 percent. This is striking, given that such participation represents a key factor toward building wealth. Local IPOs increase both households’ propensity to own stock and their percent equity holdings. The attention channel drives effects: local IPOs attract attention to the market, through increased information production and publicity. The wealth channel has little influence, consistent with local IPOs not generating wealth shocks for most households.

Suggested Citation

  • Feng Jiang & Michelle Lowry & Yiming Qian, 2024. "Local IPOs and household stock market participation," Review of Finance, European Finance Association, vol. 28(6), pages 1919-1952.
    • Handle: RePEc:oup:revfin:v:28:y:2024:i:6:p:1919-1952.
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    File URL: https://hdl.handle.net/10.1093/rof/rfae023
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    More about this item

    Keywords

    IPO; household finance; stock market participation; attention; local agglomeration;
    All these keywords.

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G51 - Financial Economics - - Household Finance - - - Household Savings, Borrowing, Debt, and Wealth
    • G53 - Financial Economics - - Household Finance - - - Financial Literacy

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