Corporate political activities and the SEC's oversight role in the IPO process

Gounopoulos, Dimitrios and Loukopoulos, Georgios and Loukopoulos, Panagiotis and Wood, Geoffrey (2022) Corporate political activities and the SEC's oversight role in the IPO process. Journal of Management Studies. ISSN 0022-2380 (https://doi.org/10.1111/joms.12892)

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Abstract

We study how a regulator (Securities and Exchanges Commission; SEC) responds to IPOs that have a higher political profile. We find that IPOs with issuers (intermediaries) that actively pursue political strategies receive more (less) SEC comment letters than IPOs without such actors. Cross‐sectional analysis reveals that the IPO's political environment moderates the relationship between social pressure for more corporate transparency and SEC scrutiny. Additional tests indicate that the political activities of issuers (intermediaries) contribute to a less (more) efficient IPO process. Overall, our findings suggest that politically active intermediaries have stronger incentives to accurately portray the IPO financial reporting environment than politically active issuers because they have greater reputational and political capital at stake; quite simply, the former have more to lose. We draw out the implications for theory, in terms of agency and reputation.

  • Item type:Article
    ID code:83156
    Dates:
    Date
    Event
    24 November 2022
    Published
    24 November 2022
    Published Online
    9 November 2022
    Accepted
    Notes:Accepted manuscript published online 24 November 2022
    Subjects:Social Sciences > Commerce > Accounting
    Department:Strathclyde Business School > Accounting and Finance
    Depositing user: Pure Administrator
    Date deposited:10 Nov 2022 14:54
    Last modified:09 Apr 2024 03:40
    URI:https://strathprints.strath.ac.uk/id/eprint/83156
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