Terrorist attacks, investor sentiment, and the pricing of initial public offerings

Yangyang Chen, Abhinav Goyal, Madhu Veeraraghavan, Leon Zolotoy*

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

10 Citations (Scopus)


Using terrorist attacks as exogenous shocks to investor sentiment, we study the impact of investor sentiment on initial public offering (IPO) pricing. IPOs listed within the 30-day period following terrorist attacks, on average, experience lower first-day returns. The documented impact of terrorist attacks is magnified when there is greater IPO valuation uncertainty and when the terrorist attacks are more salient to investors, while mitigated for IPOs “certified” by reputable intermediaries. We also show that the affected IPOs, on average, have more pessimistic media tone in the post-attack/pre-listing day period. The affected IPOs also tend to have lower levels of price revisions, subscriptions, primary share revisions, and total proceeds. Collectively, our findings underscore the salience of investor sentiment in shaping IPO outcomes.

Original languageEnglish
Article number101780
JournalJournal of Corporate Finance
Publication statusPublished - Dec 2020

Bibliographical note

Publisher Copyright:
© 2020 Elsevier B.V.


  • Investor sentiment
  • IPO pricing
  • Terrorist attacks

ASJC Scopus subject areas

  • Business and International Management
  • Finance
  • Economics and Econometrics
  • Strategy and Management


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