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The effects of banking relationship, legal origin, private equity and lead managers on the performance of west African IPO firms

The effects of banking relationship, legal origin, private equity and lead managers on the performance of west African IPO firms
The effects of banking relationship, legal origin, private equity and lead managers on the performance of west African IPO firms

This paper examines the performance effects arising from initial primary offering (IPO) firms retaining their existing bank as a lead manager together with the effects of foreign and domestic lead managers, corporate insiders and private equity investors across West Africa. Using a unique and comprehensive sample of 37 locally listed IPO firm's from across West Africa, I find evidence of a considerable reduction in underpricing and costs of equity in firms listing on civil code as opposed to common law markets. Furthermore, I find evidence that firms employing their existing bank as lead manager have higher costs of equity while the employment of a foreign as opposed to domestic lead manager imparts a reduction in underpricing and cost of equity.

agency theory, cost of equity, IPO, underpricing, West Africa
0038-2280
430-451
Hearn, Bruce
45dccea3-9631-4e5e-914c-385896674dc2
Hearn, Bruce
45dccea3-9631-4e5e-914c-385896674dc2

Hearn, Bruce (2011) The effects of banking relationship, legal origin, private equity and lead managers on the performance of west African IPO firms. South African Journal of Economics, 79 (4), 430-451. (doi:10.1111/j.1813-6982.2011.01285.x).

Record type: Article

Abstract

This paper examines the performance effects arising from initial primary offering (IPO) firms retaining their existing bank as a lead manager together with the effects of foreign and domestic lead managers, corporate insiders and private equity investors across West Africa. Using a unique and comprehensive sample of 37 locally listed IPO firm's from across West Africa, I find evidence of a considerable reduction in underpricing and costs of equity in firms listing on civil code as opposed to common law markets. Furthermore, I find evidence that firms employing their existing bank as lead manager have higher costs of equity while the employment of a foreign as opposed to domestic lead manager imparts a reduction in underpricing and cost of equity.

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More information

Published date: December 2011
Keywords: agency theory, cost of equity, IPO, underpricing, West Africa

Identifiers

Local EPrints ID: 423322
URI: http://eprints.soton.ac.uk/id/eprint/423322
ISSN: 0038-2280
PURE UUID: 5c314568-d65f-4878-bdcc-f1e44a8b24a2
ORCID for Bruce Hearn: ORCID iD orcid.org/0000-0001-9767-0198

Catalogue record

Date deposited: 20 Sep 2018 16:30
Last modified: 07 Oct 2020 00:21

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