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IPO Survival in a Reputational Market
Author(s) -
Espenlaub Susanne,
Khurshed Arif,
Mohamed Abdulkadir
Publication year - 2012
Publication title -
journal of business finance and accounting
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.282
H-Index - 77
eISSN - 1468-5957
pISSN - 0306-686X
DOI - 10.1111/j.1468-5957.2012.02280.x
Subject(s) - initial public offering , reputation , investment banking , business , accounting , financial system , economics , monetary economics , finance , political science , law
We examine IPO survival in a ‘reputational’ market, the Alternative Investment Market (AIM), where principle‐based regulation pivots on the role of a regulatory agent, the nominated advisor (Nomad) to the IPO company. We find that Nomad reputation has a significant impact on IPO survival. IPOs backed by reputable Nomads ‘survive longer (by about two years) than those backed by other Nomads. We also find that s urvival rates of AIM IPOs are broadly comparable to those of North American IPOs. While these results are of obvious interest to various stakeholders of AIM firms, they also provide important lessons for market places modeled on AIM including the upper‐tier of the US over‐the‐counter market (OTCQX), Italy's AIM Italia, and Japan's Tokyo AIM.