Abstract: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 survival 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.

No abstract

This is a repository copy of Cross-border venture capital investments: The impact of foreignness on returns.

Around the world, investors, practitioners, regulators and policy makers seek to understand whether, when and why recently listed stocks, initial public offerings (IPOs) are delisted rather than continue trading (survive). Using data on 7,627 IPOs issued during 2000-2008 across 32 countries, we explore the impact of the legal system on IPO survival. We find that IPOs in countries with better investor protections remain listed for longer. This suggests that better legal systems increase the net benefits companies derive from staying listed. We also provide evidence that better legal systems increase the effectiveness of IPO certification by venture capitalists, underwriters and auditors.JEL classification: G15, G3, F3, K4

Recent U.S. policy encourages anchor investments to facilitate initial public offerings (IPO) and increase companies' access to external finance. As access to external funds relies on stocks remaining listed, we study anchor investors' impact on how long IPOs stay listed. We examine two types of anchor investors in Hong Kong: strategic and cornerstone investors, that are similar to U.S. anchor investors, but make varying levels of commitment at and post-IPO. We find that IPOs backed by more committed investors, with longer post-IPO commitments (lockups), stay listed longer. This suggests that the success of U.S. policies may require investors' commitment.