Greater partisan alignment among lawmakers enhances their ability to respond rapidly to adverse shocks, but it also undermines the quality of checks and balances and encourages excessive governmental intervention in local areas aligned with the ruling party. We investigate how this form of local policy risk affects IPO underpricing. One standard-deviation increase in political alignment between local politicians and the federal government translates into an extra $1.58 million being left on the table, which corresponds to 5.39% of the average valuation discount. This effect is concentrated in firms that are vulnerable to legislative interventions and has important long-term implications. Our robustness analysis also shows that our baseline results are not sensitive to the inclusion/exclusion of influential states and years with high IPO activity.

立法者之间更大程度的党派联合可以增强他们迅速对不利冲击做出反应的能力，但同时也削弱了制衡的质量，并鼓励政府在与执政党一致的地方进行过多干预。我们调查了这种形式的本地政策风险如何影响IPO定价偏低。地方政客与联邦政府之间的政治契合度每增加一个标准差，就意味着多了158万美元，相当于平均估值折让的5.39％。这种影响集中在容易受到立法干预并具有重要的长期影响的公司中。我们的稳健性分析还显示，我们的基准结果对有/没有影响力的州和具有较高IPO活动的年份不敏感。