The Cost of Going Public: a European Perspective

This paper questions whether the segmentation in the European IPO market plays a role in determining the cost of going public. Precisely, we compare the commissions charged by underwriters to firms listing on the stock markets of the four largest European economies. Coherently with previous results, we document the existence of a non-linear relationship between the cost-variables and the amount of capital raised, with a different effect depending on the item cost considered. We find that the market structure affects the level of underwriter commissions, together with the prestige of the underwriter. We also investigate whether underwriters who charge high spreads are also able to leave more money on the table. Results are robust for endogeneity between underwriter commission and underpricing.