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Rejected stock exchange applicants

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  • Fjesme, Sturla L.
  • Galpin, Neal E.
  • Moore, Lyndon

Abstract

We examine listing applications by firms to the London Stock Exchange between 1891 and 1911. The exchange rejected 82 (13.1%) of the 628 applicants to its main board. Accepted applicants were twice as likely to pay dividends (and to pay twice as much) and had longer firm lives than rejected applicants. Rejected applicants were more likely to file for liquidation than successful applicants. These results remain even after we control for the primary benefits of the listing itself: liquidity and future capital inflows. In this era, the London Stock Exchange could screen applicants for listing.

Suggested Citation

  • Fjesme, Sturla L. & Galpin, Neal E. & Moore, Lyndon, 2021. "Rejected stock exchange applicants," Journal of Financial Economics, Elsevier, vol. 139(2), pages 502-521.
  • Handle: RePEc:eee:jfinec:v:139:y:2021:i:2:p:502-521
    DOI: 10.1016/j.jfineco.2020.08.005
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    Cited by:

    1. Hannah, Leslie & Foreman-Peck, James S., 2023. "Business Forms and Business Performance in UK Manufacturing 1871-81," MPRA Paper 119447, University Library of Munich, Germany.
    2. Bogle, David A. & Campbell, Gareth & Coyle, Christopher & Turner, John D., 2024. "Why did shareholder liability disappear?," Journal of Financial Economics, Elsevier, vol. 152(C).
    3. Fjesme, Sturla Lyngnes & Lv, Jin Roc & Shekhar, Chander, 2023. "The world cup in football and the US IPO market," Journal of Corporate Finance, Elsevier, vol. 80(C).
    4. Turner, John D., 2024. "Three centuries of corporate governance in the UK," QUCEH Working Paper Series 24-01, Queen's University Belfast, Queen's University Centre for Economic History.
    5. Fjesme, Sturla & Hannah, Leslie & Moore, Lyndon, 2024. "Informed investors, screening, and sorting on the London capital market, 1891-1913," Explorations in Economic History, Elsevier, vol. 91(C).
    6. Wilco Legierse, 2023. "Offering Method and Pricing of IPOs: An Analysis of Stock IPOs in the Netherlands, 1918–1939," De Economist, Springer, vol. 171(3), pages 207-238, September.
    7. Abe de Jong & Wilco Legierse, 2022. "What causes hot markets for equity IPOs? An analysis of initial public offerings in the Netherlands, 1876–2015 [Market timing and capital structure]," European Review of Economic History, European Historical Economics Society, vol. 26(2), pages 208-233.

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    More about this item

    Keywords

    Financial intermediaries; Securities markets; Initial public offering;
    All these keywords.

    JEL classification:

    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage
    • N23 - Economic History - - Financial Markets and Institutions - - - Europe: Pre-1913

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