IPO Survival in a Reputational Market

37 Pages Posted: 21 Apr 2012

See all articles by Susanne Espenlaub

Susanne Espenlaub

University of Manchester - Manchester Business School

Arif Khurshed

University of Manchester - Manchester Business School, Division of Accounting Finance

Abdul Mohamed

Cranfield University - School of Management

Date Written: April/May 2012

Abstract

We examine IPO survival in a ‘reputational’ market, the Alternative Investment Market (AIM), where principle‐based regulation pivots on the role of a regulatory agent, the nominated advisor (Nomad) to the IPO company. We find that Nomad reputation has a significant impact on IPO survival. IPOs backed by reputable Nomads ‘survive longer (by about two years) than those backed by other Nomads. We also find that survival rates of AIM IPOs are broadly comparable to those of North American IPOs. While these results are of obvious interest to various stakeholders of AIM firms, they also provide important lessons for market places modeled on AIM including the upper‐tier of the US over‐the‐counter market (OTCQX), Italy's AIM Italia, and Japan's Tokyo AIM.

Keywords: IPO, new list(ing), survival, delisting, Alternative Investment Market, AIM, nominated advisor, Nomad

Suggested Citation

Espenlaub, Susanne and Khurshed, Arif and Mohamed, Abdul, IPO Survival in a Reputational Market (April/May 2012). Journal of Business Finance & Accounting, Vol. 39, Issue 3‐4, pp. 427-463, 2012. Available at SSRN: https://ssrn.com/abstract=2042954 or http://dx.doi.org/10.1111/j.1468-5957.2012.02280.x

Susanne Espenlaub

University of Manchester - Manchester Business School ( email )

Booth Street West
Manchester, M15 6PB
United Kingdom

Arif Khurshed

University of Manchester - Manchester Business School, Division of Accounting Finance ( email )

Crawford House
Oxford Road
Manchester, M15 6PB
United Kingdom
+44 0 161 275 4475 (Phone)
+44 0 161 275 4023 (Fax)

Abdul Mohamed

Cranfield University - School of Management ( email )

Bedfordshire, MK43 0AL
United Kingdom

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