Do Lawyers Matter in Initial Public Offerings?
58 Pages Posted: 8 Dec 2022
Date Written: November 10, 2022
Abstract
This study provides novel evidence that law firms representing issuers have a material impact on economic outcomes in the IPO market. Fixed effects for legal counsel explain a significant portion of the variation in IPO underpricing, comparable to underwriter fixed effects documented in prior studies. Issuer law firms also exhibit differential skill in moderating the likelihood of IPO-related litigation, and have an idiosyncratic influence on the structure of IPO disclosures. Accounting for endogenous selection, we document that law firms associated with lower rates of IPO-related litigation are also associated with less first-day underpricing and receive higher fees from their clients.
Keywords: IPO, Lawyers, Disclosure, Underpricing, Litigation, Fixed Effects
JEL Classification: G10, G18, G38, K22
Suggested Citation: Suggested Citation