The impact of shareholders and creditors rights on IPO performance: An international study

Susanne Espenlaub; Abhinav Goyal; Abdulkadir Mohamed

doi:10.1016/j.bar.2019.100872

The impact of shareholders and creditors rights on IPO performance: An international study

Susanne Espenlaub, Abhinav Goyal, Abdulkadir Mohamed^*

^*Corresponding author for this work

Finance

Research output: Contribution to journal › Article › peer-review

7 Citations (Scopus)

Abstract

This paper examines the impact of cross-country variation in shareholders' and debt holders' rights on post-IPO performance and survival of newly listed stocks across the globe. Using a sample of 10,490 initial public offerings (IPOs) in 40 countries between 2000 and 2013, we find that post-IPO performance and survival is better in countries with stronger shareholder protection, but the impact of creditor protection is negative i.e. stronger creditor protection leads to poor post-IPO performance and survival. This effect is driven by rules requiring creditors’ consent for company reorganization and the mandatory replacement of incumbent managers. Reputable IPO advisors exacerbate the positive impact of shareholder rights and the negative impact of creditor rights.

Original language	English
Article number	100872
Journal	British Accounting Review
Volume	52
Issue number	1
DOIs	https://doi.org/10.1016/j.bar.2019.100872
Publication status	Published - Jan 2020

Bibliographical note

Publisher Copyright:
© 2019 Elsevier Ltd

Keywords

Anti-director rights index (ADRI)
Creditor rights
Investor protection
IPO delisting
Long-term performance
Security law
Shareholder rights

ASJC Scopus subject areas

Accounting

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10.1016/j.bar.2019.100872

Cite this

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title = "The impact of shareholders and creditors rights on IPO performance: An international study",

abstract = "This paper examines the impact of cross-country variation in shareholders' and debt holders' rights on post-IPO performance and survival of newly listed stocks across the globe. Using a sample of 10,490 initial public offerings (IPOs) in 40 countries between 2000 and 2013, we find that post-IPO performance and survival is better in countries with stronger shareholder protection, but the impact of creditor protection is negative i.e. stronger creditor protection leads to poor post-IPO performance and survival. This effect is driven by rules requiring creditors{\textquoteright} consent for company reorganization and the mandatory replacement of incumbent managers. Reputable IPO advisors exacerbate the positive impact of shareholder rights and the negative impact of creditor rights.",

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AU - Mohamed, Abdulkadir

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AB - This paper examines the impact of cross-country variation in shareholders' and debt holders' rights on post-IPO performance and survival of newly listed stocks across the globe. Using a sample of 10,490 initial public offerings (IPOs) in 40 countries between 2000 and 2013, we find that post-IPO performance and survival is better in countries with stronger shareholder protection, but the impact of creditor protection is negative i.e. stronger creditor protection leads to poor post-IPO performance and survival. This effect is driven by rules requiring creditors’ consent for company reorganization and the mandatory replacement of incumbent managers. Reputable IPO advisors exacerbate the positive impact of shareholder rights and the negative impact of creditor rights.

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KW - Investor protection

KW - IPO delisting

KW - Long-term performance

KW - Security law

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The impact of shareholders and creditors rights on IPO performance: An international study

Abstract

Bibliographical note

Keywords

ASJC Scopus subject areas

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