The determinants of IPO withdrawal – Evidence from Europe

Pia Helbing; Brian M. Lucey; Samuel A. Vigne

doi:10.1016/j.jcorpfin.2019.03.001

The determinants of IPO withdrawal – Evidence from Europe

Pia Helbing, Brian M. Lucey^*, Samuel A. Vigne

^*Corresponding author for this work

Research output: Contribution to journal › Article › peer-review

Abstract / Description of output

Why do companies not follow through with an IPO after filing for one? This question is investigated by examining common stock IPOs for the largest countries in Europe. We cover 80% of the Western European IPO market over the 2001–2015 period. We establish that the IPO phenomenon of withdrawal is a common feature of equity markets and identify key characteristics that influence the probability of withdrawal. Findings indicate that venture capital or private equity involvement, the presence of negative news, CEO duality, or the intent to retire debt increase the probability of IPO withdrawal. On the other hand, higher levels of corporate governance or trading volume decrease the pssrobability of IPO withdrawal. We argue that imminent agency conflicts and the lack of appropriate control mechanisms can force a company to withdraw from the IPO.

Original language	English
Pages (from-to)	415-436
Number of pages	22
Journal	Journal of Corporate Finance
Volume	56
Early online date	24 Mar 2019
DOIs	https://doi.org/10.1016/j.jcorpfin.2019.03.001
Publication status	Published - Jun 2019

Keywords / Materials (for Non-textual outputs)

Europe
initial public offering
probit
withdrawal

Access to Document

10.1016/j.jcorpfin.2019.03.001

Cite this

@article{bc3b63ea5eb34528bd573484180447ca,

title = "The determinants of IPO withdrawal – Evidence from Europe",

abstract = "Why do companies not follow through with an IPO after filing for one? This question is investigated by examining common stock IPOs for the largest countries in Europe. We cover 80% of the Western European IPO market over the 2001–2015 period. We establish that the IPO phenomenon of withdrawal is a common feature of equity markets and identify key characteristics that influence the probability of withdrawal. Findings indicate that venture capital or private equity involvement, the presence of negative news, CEO duality, or the intent to retire debt increase the probability of IPO withdrawal. On the other hand, higher levels of corporate governance or trading volume decrease the pssrobability of IPO withdrawal. We argue that imminent agency conflicts and the lack of appropriate control mechanisms can force a company to withdraw from the IPO.",

keywords = "Europe, initial public offering, probit, withdrawal",

author = "Pia Helbing and Lucey, {Brian M.} and Vigne, {Samuel A.}",

note = "Funding Information: The authors wish to thank Wolfgang Bessler, Philipp Br{\"u}ggen, Arnold Cowan, Douglas Cumming, Fabian Gogolin, Gabriele Lattanzio, and three anonymous reviewers for their very valuable comments. The comments received from the seminar participants at Queen's University Management School, Trinity Business School, Alliance Manchester Business School, the Irish Finance Symposium, the School of Finance at Nankai University, the Chinese Academy of Sciences, the 2017 INFINITI Conference, the 2017 Money Macro and Finance Research Group Annual Conference, the 2018 Eastern Finance Association and the 2018 New Zealand Finance Meeting, are gratefully acknowledged. Pia Helbing acknowledges the funding from the Friedrich Naumann Foundation for Freedom . Publisher Copyright: {\textcopyright} 2019 Copyright: Copyright 2019 Elsevier B.V., All rights reserved.",

year = "2019",

month = jun,

doi = "10.1016/j.jcorpfin.2019.03.001",

language = "English",

volume = "56",

pages = "415--436",

journal = "Journal of Corporate Finance",

issn = "0929-1199",

publisher = "Elsevier B.V.",

}

TY - JOUR

T1 - The determinants of IPO withdrawal – Evidence from Europe

AU - Helbing, Pia

AU - Lucey, Brian M.

AU - Vigne, Samuel A.

N1 - Funding Information: The authors wish to thank Wolfgang Bessler, Philipp Brüggen, Arnold Cowan, Douglas Cumming, Fabian Gogolin, Gabriele Lattanzio, and three anonymous reviewers for their very valuable comments. The comments received from the seminar participants at Queen's University Management School, Trinity Business School, Alliance Manchester Business School, the Irish Finance Symposium, the School of Finance at Nankai University, the Chinese Academy of Sciences, the 2017 INFINITI Conference, the 2017 Money Macro and Finance Research Group Annual Conference, the 2018 Eastern Finance Association and the 2018 New Zealand Finance Meeting, are gratefully acknowledged. Pia Helbing acknowledges the funding from the Friedrich Naumann Foundation for Freedom . Publisher Copyright: © 2019 Copyright: Copyright 2019 Elsevier B.V., All rights reserved.

PY - 2019/6

Y1 - 2019/6

N2 - Why do companies not follow through with an IPO after filing for one? This question is investigated by examining common stock IPOs for the largest countries in Europe. We cover 80% of the Western European IPO market over the 2001–2015 period. We establish that the IPO phenomenon of withdrawal is a common feature of equity markets and identify key characteristics that influence the probability of withdrawal. Findings indicate that venture capital or private equity involvement, the presence of negative news, CEO duality, or the intent to retire debt increase the probability of IPO withdrawal. On the other hand, higher levels of corporate governance or trading volume decrease the pssrobability of IPO withdrawal. We argue that imminent agency conflicts and the lack of appropriate control mechanisms can force a company to withdraw from the IPO.

AB - Why do companies not follow through with an IPO after filing for one? This question is investigated by examining common stock IPOs for the largest countries in Europe. We cover 80% of the Western European IPO market over the 2001–2015 period. We establish that the IPO phenomenon of withdrawal is a common feature of equity markets and identify key characteristics that influence the probability of withdrawal. Findings indicate that venture capital or private equity involvement, the presence of negative news, CEO duality, or the intent to retire debt increase the probability of IPO withdrawal. On the other hand, higher levels of corporate governance or trading volume decrease the pssrobability of IPO withdrawal. We argue that imminent agency conflicts and the lack of appropriate control mechanisms can force a company to withdraw from the IPO.

KW - Europe

KW - initial public offering

KW - probit

KW - withdrawal

UR - http://www.scopus.com/inward/record.url?scp=85064269249&partnerID=8YFLogxK

U2 - 10.1016/j.jcorpfin.2019.03.001

DO - 10.1016/j.jcorpfin.2019.03.001

M3 - Article

AN - SCOPUS:85064269249

SN - 0929-1199

VL - 56

SP - 415

EP - 436

JO - Journal of Corporate Finance

JF - Journal of Corporate Finance

ER -

The determinants of IPO withdrawal – Evidence from Europe

Abstract / Description of output

Keywords / Materials (for Non-textual outputs)

Access to Document

Other files and links

Fingerprint

Cite this