Legal Liability and Issuer Expenses in IPOs
University of California, Los Angeles (UCLA); National Bureau of Economic Research (NBER)
Randolph P. Beatty
University of Southern California - Leventhal School of Accounting
Issuers of Initial Public Offerings (IPOs) face numerous decisions, of which the selection and compensation of experts---the legal counsel, the auditor and the investment banker---are among the most important. Using new data, our paper investigates the role of the entire IPO coalition (including the legal counsel). We examine how expert compensation, IPO underpricing, IPO underpricing uncertainty, and subsequent performance are related to:  expert quality;  legal caution and liability;  non- legal risk signals; and  one another.
JEL Classification: K2, G21working papers series
Date posted: December 20, 1998
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