Impact of Legal Institutions on IPO Survival: A Global Perspective

42 Pages Posted: 11 Jun 2016

See all articles by Susanne Espenlaub

Susanne Espenlaub

University of Manchester - Manchester Business School

Abhinav Goyal

University College Cork

Abdul Mohamed

Cranfield University - School of Management

Date Written: June 8, 2016

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.

Keywords: G15, G3, F3, K4

JEL Classification: IPO; delisting; international markets; legality index; certification hypothesis

Suggested Citation

Espenlaub, Susanne and Goyal, Abhinav and Mohamed, Abdul, Impact of Legal Institutions on IPO Survival: A Global Perspective (June 8, 2016). Journal of Financial Stability, Forthcoming. Available at SSRN: https://ssrn.com/abstract=2792221

Susanne Espenlaub

University of Manchester - Manchester Business School ( email )

Booth Street West
Manchester, M15 6PB
United Kingdom

Abhinav Goyal (Contact Author)

University College Cork ( email )

O'Rahilly Building
College Road
Cork
Ireland
+353 (0)21 490 2839 (Phone)

Abdul Mohamed

Cranfield University - School of Management ( email )

Bedfordshire, MK43 0AL
United Kingdom

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