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Endogenous market choice, listing regulations, and IPO spread: Evidence from the London Stock Exchange

Hafiz Hoque Orcid Logo, John Doukas

International Journal of Finance & Economics

Swansea University Author: Hafiz Hoque Orcid Logo

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DOI (Published version): 10.1002/ijfe.2783

Abstract

This study examines the endogenous market choice and its impact on underwriter spread if Alternative Investment Market (AIM) IPOs that meet Main Market (MM) listing requirements had issued equity in the MM during the 1995–2021 period. We find that the spread is 1.33% higher in the AIM than the MM fo...

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Published in: International Journal of Finance & Economics
ISSN: 1076-9307 1099-1158
Published: Wiley
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URI: https://cronfa.swan.ac.uk/Record/cronfa62311
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first_indexed 2023-01-12T10:14:44Z
last_indexed 2023-01-26T04:17:08Z
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spelling v2 62311 2023-01-12 Endogenous market choice, listing regulations, and IPO spread: Evidence from the London Stock Exchange 06d1239b4524fff9c0a0f52a2a368910 0000-0002-4354-3895 Hafiz Hoque Hafiz Hoque true false 2023-01-12 BAF This study examines the endogenous market choice and its impact on underwriter spread if Alternative Investment Market (AIM) IPOs that meet Main Market (MM) listing requirements had issued equity in the MM during the 1995–2021 period. We find that the spread is 1.33% higher in the AIM than the MM for IPO listings that meet the MM listing requirements. This finding suggests that AIM companies, meeting the MM listing requirements, could have saved more than £100 million by going public through the MM than the AIM market. We also find that this spread differential is attributed to the issuing firms' market self-selection. We demonstrate that listing requirements in the MM have an impact on the gross spread. The Propensity score matching results show that AIM firms that meet the MM market listing requirements pay a 0.921% higher spread which is significant at a 1% level compared to the MM market IPOs. Journal Article International Journal of Finance &amp; Economics Wiley 1076-9307 1099-1158 Gross spread, Heckman selection model, listing requirements, propensity score matching, underwriter fixed effects 0 0 0 0001-01-01 10.1002/ijfe.2783 http://dx.doi.org/10.1002/ijfe.2783 COLLEGE NANME Accounting and Finance COLLEGE CODE BAF Swansea University SU Library paid the OA fee (TA Institutional Deal) Swansea University 2023-09-20T14:49:25.9845266 2023-01-12T10:13:08.8238753 Faculty of Humanities and Social Sciences School of Management - Accounting and Finance Hafiz Hoque 0000-0002-4354-3895 1 John Doukas 2 62311__27671__dac8eff86f1c4c9096dc43e0556d0dfe.pdf 62311.pdf 2023-06-01T14:36:04.2619064 Output 1284150 application/pdf Version of Record true This is an open access article under the terms of the Creative Commons Attribution-NonCommercial-NoDerivsLicense, which permits use and distribution in any medium, provided the original work is properly cited, the use is non-commercial and no modifications or adaptations are made.© 2023 The Authors.International Journal of Finance & Economics published by John Wiley & Sons Ltd.Int true eng http://creativecommons.org/licenses/by-nc-nd/4.0/
title Endogenous market choice, listing regulations, and IPO spread: Evidence from the London Stock Exchange
spellingShingle Endogenous market choice, listing regulations, and IPO spread: Evidence from the London Stock Exchange
Hafiz Hoque
title_short Endogenous market choice, listing regulations, and IPO spread: Evidence from the London Stock Exchange
title_full Endogenous market choice, listing regulations, and IPO spread: Evidence from the London Stock Exchange
title_fullStr Endogenous market choice, listing regulations, and IPO spread: Evidence from the London Stock Exchange
title_full_unstemmed Endogenous market choice, listing regulations, and IPO spread: Evidence from the London Stock Exchange
title_sort Endogenous market choice, listing regulations, and IPO spread: Evidence from the London Stock Exchange
author_id_str_mv 06d1239b4524fff9c0a0f52a2a368910
author_id_fullname_str_mv 06d1239b4524fff9c0a0f52a2a368910_***_Hafiz Hoque
author Hafiz Hoque
author2 Hafiz Hoque
John Doukas
format Journal article
container_title International Journal of Finance &amp; Economics
institution Swansea University
issn 1076-9307
1099-1158
doi_str_mv 10.1002/ijfe.2783
publisher Wiley
college_str Faculty of Humanities and Social Sciences
hierarchytype
hierarchy_top_id facultyofhumanitiesandsocialsciences
hierarchy_top_title Faculty of Humanities and Social Sciences
hierarchy_parent_id facultyofhumanitiesandsocialsciences
hierarchy_parent_title Faculty of Humanities and Social Sciences
department_str School of Management - Accounting and Finance{{{_:::_}}}Faculty of Humanities and Social Sciences{{{_:::_}}}School of Management - Accounting and Finance
url http://dx.doi.org/10.1002/ijfe.2783
document_store_str 1
active_str 0
description This study examines the endogenous market choice and its impact on underwriter spread if Alternative Investment Market (AIM) IPOs that meet Main Market (MM) listing requirements had issued equity in the MM during the 1995–2021 period. We find that the spread is 1.33% higher in the AIM than the MM for IPO listings that meet the MM listing requirements. This finding suggests that AIM companies, meeting the MM listing requirements, could have saved more than £100 million by going public through the MM than the AIM market. We also find that this spread differential is attributed to the issuing firms' market self-selection. We demonstrate that listing requirements in the MM have an impact on the gross spread. The Propensity score matching results show that AIM firms that meet the MM market listing requirements pay a 0.921% higher spread which is significant at a 1% level compared to the MM market IPOs.
published_date 0001-01-01T14:49:24Z
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