Underpricing of IPOs and Legal Frameworks Around the World
Journal
Review of Law and Economics
ISSN
1555-5879
Type
journal article
Date Issued
2008-01-01
Author(s)
Abstract
This paper analyzes the relationship around the world between the underpricing of IPOs and a country's legal framework. From the theoretical research we expect a negative relationship between a higher level of investor protection (and other measures of a country's legal framework) and the level of underpricing. The empirical results support our expectations and show a negative relationship between a country's legal framework and the underpricing of IPOs. In this way, this study adds to the growing law and finance literature. Firms in countries with stronger investor protection (and other measures of the country's legal framework) have, ceteris paribus, lower costs to go public, and thus an international advantage in comparison to firms from other countries with less developed legal frameworks.
Language
English
HSG Classification
contribution to scientific community
Refereed
Yes
Publisher
De Gruyter
Publisher place
Berlin
Volume
4
Number
1
Start page
419
End page
441
Pages
23
Subject(s)
Eprints ID
244597