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The impact of shareholders and creditors rights on IPO performance: An international study
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Date
2019-11-09
Authors
Espenlaub, Susanne
Goyal, Abhinav
Mohamed, Abdulkadir
Journal Title
Journal ISSN
Volume Title
Publisher
Elsevier
Published Version
Abstract
This paper examines the impact of cross-country variation in shareholders' and debt holders' rights on post-IPO performance and survival of newly listed stocks across the globe. Using a sample of 10,490 initial public offerings (IPOs) in 40 countries between 2000 and 2013, we find that post-IPO performance and survival is better in countries with stronger shareholder protection, but the impact of creditor protection is negative i.e. stronger creditor protection leads to poor post-IPO performance and survival. This effect is driven by rules requiring creditors’ consent for company reorganization and the mandatory replacement of incumbent managers. Reputable IPO advisors exacerbate the positive impact of shareholder rights and the negative impact of creditor rights.
Description
Keywords
Investor protection , Shareholder rights , Anti-director rights index (ADRI) , Creditor rights , IPO delisting , Long-term performance , Security law
Citation
Espenlaub, S., Goyal, A. and Mohamed, A. (2019) 'The impact of shareholders and creditors rights on IPO performance: An international study', The British Accounting Review, 100872 (22 pp). doi: 10.1016/j.bar.2019.100872