No abstract

This paper analyses the relationship between issuers' location and IPO underpricing in the U.S. from 1986-2014. Issuers headquartered in rural areas are associated with lower underpricing compared to urban firms. This finding is consistent with strong local bias in rural areas accompanied by superior local information, which associates with more accurate pricing and less money left on the table. The paper further finds that refined measures of local bias, such as proximity to finance professionals and density of financial expertise, correlate more with IPO underpricing than proximity to large cities. JEL classification: G10, G12, G30

Political tension causing diplomatic strains rarely escalates into direct violence or war. This paper identifies the economic effects of such non-violent political tension by examining Taiwan's sovereignty debate. Non-violent events harming the relationship with mainland China lead to an average daily drop of 200 basis points in Taiwanese stock returns. The impact is more severe on firms openly supporting the Taiwanese pro-independence party. Through a series of tests we identify this economic penalty as initiated by mainland authorities, who specifically target political opponents that are economically exposed to mainland China via either investments or exports.

The Baltic Journal of Economics is published by EuroBaltic Centres of Excellence and refereed by internationally recognized scientific standards. The journal is intended to provide a publication medium for original research in economics for scholars working in the Baltic states or those who are working on topics relevant to the Baltic states. Papers may be theoretical, empirical or political economy in emphasis. Papers with policy relevance or which combine economic theory with empirical findings are particularly welcome. The Journal aims to stimulate a dialogue between scientists in social science, policy makers as well as other decision makers involved with economic development in the Baltic States. In order to make the journal relevant to a wide audience of academics trained in social science the articles should be presented in a form where explanations and the intuition behind the conclusions should be given priority above technical derivations.