Economic Policy Uncertainty and Fluctuations in Monthly IPO Volume: Evidence from the US

This research examines the dynamic relationship between economic policy uncertainty (EPU) and initial public offering (IPO) volume in the UnitedStates from 1990 to 2020.Employing time-series econometric methods, we find that EPU has a significant negative effect on IPO activities.According to impulse responses, the number of IPOs significantly reacts to the innovations on EPU within the next 1 to 4 months and approaches the new equilibrium in 6 to 8 months.However, EPU does not contribute to forecast error variance decompositions of the number of IPOs.Our empirical results also show that the number of IPOs switches between low-mean/high-variance and highmean/low-variance regimes.The results have some useful implications for timing IPOs in terms of economic policy uncertainty.