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Oil Price Uncertainty and IPOs

Author

Listed:
  • Magnus Blomkvist
  • Nebojsa Dimic
  • Milos Vulanovic

Abstract

We examine the impact of oil price uncertainty on IPO volume in the oil and gas sector. By using the implied volatility of oil options, a forward-looking uncertainty measure, we identify the effect of uncertainty on the going-public decision. Oil price uncertainty exhibits a strong negative relation to IPO volume. A one standard deviation decrease in the implied volatility results in a 29% increase in the number of quarterly IPOs. The effect is concentrated among the price-sensitive upstream producers. We further report that uncertainty positively impacts the IPO withdrawal decision and increases the value of postponing the offering.

Suggested Citation

  • Magnus Blomkvist & Nebojsa Dimic & Milos Vulanovic, 2023. "Oil Price Uncertainty and IPOs," The Energy Journal, , vol. 44(6), pages 21-42, November.
    • Handle: RePEc:sae:enejou:v:44:y:2023:i:6:p:21-42
    DOI: 10.5547/01956574.44.6.mblo
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    References listed on IDEAS

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    Cited by:

    1. Demetriades, Elias & Politsidis, Panagiotis N., 2025. "Bank lending to fossil fuel firms," Journal of Financial Stability, Elsevier, vol. 76(C).
    2. repec:hal:journl:hal-04790588 is not listed on IDEAS
    3. Elias Demetriades & Panagiotis Politsidis, 2025. "Bank lending to fossil fuel firms," Post-Print hal-04804492, HAL.
    4. Wang, Jinpeng & Zhang, Tao, 2025. "Oil price uncertainty and corporate digital transformation: Evidence from China," Energy Economics, Elsevier, vol. 151(C).
    5. Ewing, Bradley T. & Malik, Farooq & Payne, James E., 2024. "Volatility transmission between upstream and midstream energy sectors," International Review of Economics & Finance, Elsevier, vol. 92(C), pages 1191-1199.

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