The impact of prestigious attorneys on IPO withdrawal in the global primary market

Abstract

Abstract This study aims to determine whether the involvement of prestigious attorneys in issuing companies affects withdrawals in the initial public offering (IPO) market. There is little evidence on how the involvement of famous lawyers affects IPO withdrawal. The study considers a large dataset consisting of 24,312 IPOs that were either successful or withdrawn from 22 distinct IPO marketplaces between January 1995 and December 2019. We find that IPO issuers may benefit from engaging with reputed attorneys by leveraging exceptional legal or negotiating abilities as quality certification signals to reduce IPO investors’ ex-ante uncertainty. Here, the objective is to protect their IPOs from withdrawal of at least by 22%. Multiple robustness tests validate the reliability of the results of this study. These findings have significant implications for researchers, legislators, investors, and issuers.

Keywords

• IPO withdrawal risk
• Reputation
• Attorneys
• Certification
• Information asymmetry
• Ex-ante uncertainty