The effects of Banking Relationship, Legal Origin, Private Equity and Lead Managers on the Performance of West African IPO Firms

South African Journal of Economics, 79(4): 430-451, 2011

31 Pages Posted: 1 Apr 2022

See all articles by Bruce Allen Hearn

Bruce Allen Hearn

University of Southampton; University of Bradford - School of Management

Date Written: February 9, 2011

Abstract

This paper examines the performance effects arising from IPO firms retaining their existing bank as a lead manager together with the effects of foreign and domestic lead managers, corporate insiders and private equity investors across West Africa. Using a unique and comprehensive sample of 37 locally listed IPO firm’s from across West Africa I find evidence of a considerable reduction in underpricing and costs of equity in firms listing on civil code as opposed to common law markets. Furthermore I find evidence that firms employing their existing bank as lead manager have higher costs of equity while the employment of a foreign as opposed to domestic lead manager imparts a reduction in underpricing and cost of equity.

Keywords: IPO; underpricing; cost of equity; West Africa; agency theory

Suggested Citation

Hearn, Bruce Allen, The effects of Banking Relationship, Legal Origin, Private Equity and Lead Managers on the Performance of West African IPO Firms (February 9, 2011). South African Journal of Economics, 79(4): 430-451, 2011, Available at SSRN: https://ssrn.com/abstract=4030683

Bruce Allen Hearn (Contact Author)

University of Southampton ( email )

University Rd.
Southampton SO17 1BJ, Hampshire SO17 1LP
United Kingdom

University of Bradford - School of Management ( email )

Emm Lane
Bradford, West Yorkshire Bd9 4JL
United Kingdom

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