Listing Standards and IPO Performance: Is More Regulation Better?

Decline in confidence in free market mechanisms in the past decade has provoked an increase in interest in regulatory issues. This paper seeks to answer one question: Are exchange listing rules an effective screening mechanism? Using a sample of IPO firms listing on major U.S. exchanges in 1984-2005...

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Bibliographic Details
Published in:Journal of applied finance and banking 2012-08, Vol.2 (4), p.209
Main Author: Semenenko, Igor
Format: Article
Language:English
Subjects:
Hypotheses
Initial public offerings
Investments
New stock market listings
Regulation
Regulation of financial institutions
Stock exchanges
Stock market delistings
Studies
Variables
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Summary:Decline in confidence in free market mechanisms in the past decade has provoked an increase in interest in regulatory issues. This paper seeks to answer one question: Are exchange listing rules an effective screening mechanism? Using a sample of IPO firms listing on major U.S. exchanges in 1984-2005, I find that (i) firms listing on different trading floors exhibit different characteristics; (ii) introduction of higher standards on one market tier does not prevent entry of low quality firms. My findings call in question the exchanges' ability to create effective screens by changing listing rules, but speak in favour of further market segmentation. [PUBLICATION ABSTRACT]
ISSN:1792-6580
1792-6599