Impact of legal institutions on IPO survival: A global perspective
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Date
2016-06-16
Authors
Espenlaub, Susanne
Goyal, Abhinav
Mohamed, Abdulkadir
Journal Title
Journal ISSN
Volume Title
Publisher
Elsevier
Published Version
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.
Description
Keywords
Certification hypothesis , Delisting , International markets , IPO , Legality index
Citation
Espenlaub, S., Goyal, A. and Mohamed, A. (2016) 'Impact of legal institutions on IPO survival: A global perspective', Journal of Financial Stability, 25, pp. 98-112. doi: 10.1016/j.jfs.2016.06.003