Attracting new listings: What shapes IPO activity across markets
This paper examines the factors associated with IPO activity across 79 global stock exchanges from 2002 to 2024, offering an analysis of both advanced and emerging and developing economies. Using panel regressions with high-dimensional fixed effects and a wide range of market and macro-financial variables, the results show that market liquidity and GDP growth consistently are linked with IPO frequency, while financial development is associated with larger offering sizes, particularly in emerging markets. In contrast, the effect of market returns and volatility weakens when controlling for regional-time fixed effects, suggesting their impact is tied to regional market cycles, structural shifts, or policy environments that vary across time. The analysis highlights structural asymmetries: emerging markets are more responsive to improvements in liquidity, financial development, and economic growth, while advanced economies exhibit stronger sensitivity to volatility and economic conditions, especially in IPO frequency.
The authors introduce a novel Listing Stringency Index (LSI), which shows that, in cross-exchange comparisons, stricter listing requirements are associated with larger IPO sizes, likely reflecting a selection effect where only larger firms meet higher thresholds, though not necessarily with increased IPO frequency. While this cross-sectional pattern suggests that stringent rules shape which firms list, not how many, the evidence also suggests that relaxing listing requirements within exchanges over time leads to a significant increase in both IPO participation and capital raised, highlighting the potential for regulatory reform to broaden market access. These findings contribute to the literature on market structure and IPO dynamics, offering insights for policymakers, exchanges, and market participants aiming to strengthen public capital markets globally.
Ishak Demir is a Research Economist at the World Federation of Exchanges; Erfan Ghofrani is a Financial Economist at the World Federation of Exchanges; Ying Liu is a Financial Economist at the World Federation of Exchanges.
This paper has received the Best Paper Award at the 2025 Annual Conference of the European Capital Markets Institute (ECMI). Financial support from ECMI is gratefully acknowledged.