Lawyer Experience and IPO Pricing

Abstract

We examine the level of experience of law firms participating in IPOs and the impact of law firm experience on IPO pricing. We find a statistically significant, negative relationship between market share of the law firm representing the investment banks and IPO price. In general, the relationship between legal counsel to the issuer and IPO price is of the same sign but not statistically significant, at customary levels, in all model specifications. We also find regional variations; there is a statistically significant, negative relationship between price and the participation of New York City underwriters? lawyers. This evidence is consistent with more practiced legal counsel requiring more negative disclosure in prospectuses.