Lead Manager’s Reputation and Aftermarket Survival of Initial Public Offerings: Empirical Evidence from India

Abstract

This article examines the effect of lead manager’s (LM) reputation on the survival profile of Indian initial public offerings (IPO) in the post-Securities and Exchange Board of India (SEBI) era. The study analyzes the relationship between the involvement of expert intermediary and the probability of delisting as well as the time duration of post-IPO failure. For this, logistic regression and parametric survival analysis models have been employed. The study reveals that IPOs backed by highly reputed LMs are less likely to get delisted and exhibit longer survival duration in the market. Overall, the results indicate that expert market intermediary plays a crucial role in acquiring the resources for successful development of newly listed issues, which in turn enhance its survivability in the aftermarket. The present study provides all new evidence on the value of reputable LMs’ involvement on subsequent survival of newly listed firms.