Prospectus Liability and the Role of Gatekeepers as Informational Intermediaries: An Empirical Analysis of the Impact of the Statutory Provisions on Italian IPOs

56 Pages Posted: 20 Jul 2017

See all articles by Dmitri Boreiko

Dmitri Boreiko

Free University of Bozen-Bolzano - School of Economics

Stefano Lombardo

European Corporate Governance Institute (ECGI); Free University of Bozen-Bolzano - CRELE Center for Research in Law and Economics; Free University of Bozen-Bolzano - Faculty of Economics and Management

Date Written: July 17, 2017

Abstract

This Article analyzes market reaction to the introduction into Italian legislation of a statutory system of (IPO) prospectus civil liability enacted in April 2007 on the basis of Directive 2003/71/EC. In particular, we study the effects of the new regulation on gatekeepers, such as underwriters and auditors who are commonly qualified as information intermediaries. We analyse the effects on average underpricing, fees charged by the underwriters, syndicate composition and reputation, and auditor participation. Although we find only weak statistical evidence that the level of underpricing has increased after April 2007, there is a statistically significant tendency to have one of the Big Four auditors in post-April 2007 IPOs, with lower participation of international banks in syndication and sharing of prospectus liability. Moreover, after April 2007 we observe an increase in the reputation of the underwriters acting as ‘responsabile del collocamento’ with lower underwriters’ fees charged.

Keywords: Law and finance, IPO, prospectus liability, diligence, securities litigation risk, underpricing, responsabile del collocamento, gatekeepers, informational intermediaries, underwriters, reputation, auditors, lawsuit avoidance hypothesis, underwriting fees

JEL Classification: G24, G38, K22

Suggested Citation

Boreiko, Dmitri and Lombardo, Stefano, Prospectus Liability and the Role of Gatekeepers as Informational Intermediaries: An Empirical Analysis of the Impact of the Statutory Provisions on Italian IPOs (July 17, 2017). European Corporate Governance Institute (ECGI) - Law Working Paper No. 359/2017, Available at SSRN: https://ssrn.com/abstract=3003825 or http://dx.doi.org/10.2139/ssrn.3003825

Dmitri Boreiko

Free University of Bozen-Bolzano - School of Economics ( email )

Sernesiplatz 1
Bozen-Bolzano, BZ 39100
Italy

Stefano Lombardo (Contact Author)

European Corporate Governance Institute (ECGI) ( email )

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

Free University of Bozen-Bolzano - CRELE Center for Research in Law and Economics ( email )

Free University of Bolzano
Piazza Universita
Bolzano, BZ 39100
Italy

Free University of Bozen-Bolzano - Faculty of Economics and Management

Piazza Universita
Bolzano-Bozen (BZ), 39100
Italy
+39 0471 013491 (Phone)

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