The FIFA World Cup Effect on the U.S. IPO Market

Abstract

Underpricing for U.S. IPOs issued during World Cup Periods (WCPs) is 9.7% lower than that outside WCPs. IPOs during WCPs experience lower post-IPO return volatility, pre-IPO price revision, and foreign investor participation but generate a higher long-run return. Sentiment and share prices are lower in the secondary market during WCPs. Issuers/underwriters recognize this effect and adjust offer prices in the primary market to incentivize investors to subscribe to new shares, but do not attempt to avoid listings during WCPs. Prices of shares issued during WCPs are more likely to be closer to intrinsic values than those issued during other periods.