Impact of legal institutions on IPO survival: A global perspective

Susanne Espenlaub; Abhinav Goyal; Abdulkadir Mohamed

doi:10.1016/j.jfs.2016.06.003

Impact of legal institutions on IPO survival: A global perspective

Susanne Espenlaub
, Abhinav Goyal^*
, Abdulkadir Mohamed

^*Corresponding author for this work

Finance

Research output: Contribution to journal › Article › peer-review

17 Citations (Scopus)

Abstract

Around the world, investors, practitioners, regulators and policy makers seek to understand whether, when and why recently listed stocks, initial public offerings (IPOs) are delisted rather than continue trading (survive). Using data on 7,627 IPOs issued during 2000–2008 across 32 countries, we explore the impact of the legal system on IPO survival. We find that IPOs in countries with better investor protections remain listed for longer. This suggests that better legal systems increase the net benefits companies derive from staying listed. We also provide evidence that better legal systems increase the effectiveness of IPO certification by venture capitalists, underwriters and auditors.

Original language	English
Pages (from-to)	98-112
Number of pages	15
Journal	Journal of Financial Stability
Volume	25
DOIs	https://doi.org/10.1016/j.jfs.2016.06.003
Publication status	Published - 1 Aug 2016

Bibliographical note

Publisher Copyright:
© 2016 Elsevier B.V.

Keywords

Certification hypothesis
Delisting
International markets
IPO
Legality index

ASJC Scopus subject areas

Finance
Economics, Econometrics and Finance(all)

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10.1016/j.jfs.2016.06.003

Cite this

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title = "Impact of legal institutions on IPO survival: A global perspective",

abstract = "Around the world, investors, practitioners, regulators and policy makers seek to understand whether, when and why recently listed stocks, initial public offerings (IPOs) are delisted rather than continue trading (survive). Using data on 7,627 IPOs issued during 2000–2008 across 32 countries, we explore the impact of the legal system on IPO survival. We find that IPOs in countries with better investor protections remain listed for longer. This suggests that better legal systems increase the net benefits companies derive from staying listed. We also provide evidence that better legal systems increase the effectiveness of IPO certification by venture capitalists, underwriters and auditors.",

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T2 - A global perspective

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AU - Goyal, Abhinav

AU - Mohamed, Abdulkadir

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AB - Around the world, investors, practitioners, regulators and policy makers seek to understand whether, when and why recently listed stocks, initial public offerings (IPOs) are delisted rather than continue trading (survive). Using data on 7,627 IPOs issued during 2000–2008 across 32 countries, we explore the impact of the legal system on IPO survival. We find that IPOs in countries with better investor protections remain listed for longer. This suggests that better legal systems increase the net benefits companies derive from staying listed. We also provide evidence that better legal systems increase the effectiveness of IPO certification by venture capitalists, underwriters and auditors.

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KW - Delisting

KW - International markets

KW - IPO

KW - Legality index

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DO - 10.1016/j.jfs.2016.06.003

M3 - Article

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SN - 1572-3089

VL - 25

SP - 98

EP - 112

JO - Journal of Financial Stability

JF - Journal of Financial Stability

ER -

Impact of legal institutions on IPO survival: A global perspective

Abstract

Bibliographical note

Keywords

ASJC Scopus subject areas

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