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

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  • Espenlaub, Susanne
  • Goyal, Abhinav
  • Mohamed, Abdulkadir

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.

Suggested Citation

  • Espenlaub, Susanne & Goyal, Abhinav & Mohamed, Abdulkadir, 2020. "The impact of shareholders and creditors rights on IPO performance: An international study," The British Accounting Review, Elsevier, vol. 52(1).
    • Handle: RePEc:eee:bracre:v:52:y:2020:i:1:s0890838919300976
    DOI: 10.1016/j.bar.2019.100872
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    More about this item

    Keywords

    Investor protection; Shareholder rights; Anti-director rights index (ADRI); Creditor rights; IPO delisting; Long-term performance; Security law;
    All these keywords.

    JEL classification:

    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • G3 - Financial Economics - - Corporate Finance and Governance
    • F3 - International Economics - - International Finance
    • K4 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior

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