The Effects of Banking Relationship, Legal Origin, Private Equity and Lead Managers on the performance of West African IPO Firms

This paper examines the performance effects arising from initial primary offering (IPO) firms retaining their existing bank as a lead manager together with the effects of foreign and domestic lead managers, corporate insiders and private equity investors across West Africa. Using a unique and comprehensive sample of 37 locally listed IPO firm’s from acrossWest Africa, I find evidence of a considerable reduction in underpricing and costs of equity in firms listing on civil code as opposed to common law markets. Furthermore, I find evidence that firms employing their existing bank as lead manager have higher costs of equity while the employment of a foreign as opposed to domestic lead manager imparts a reduction in underpricing and cost of equity.