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Rejected stock exchange applicants

Sturla Fjesme (), Neal E. Galpin and Lyndon Moore

Journal of Financial Economics, 2021, vol. 139, issue 2, 502-521

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.

Keywords: Financial intermediaries; Securities markets; Initial public offering (search for similar items in EconPapers)
JEL-codes: G24 N23 (search for similar items in EconPapers)
Date: 2021
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DOI: 10.1016/j.jfineco.2020.08.005

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Handle: RePEc:eee:jfinec:v:139:y:2021:i:2:p:502-521