U.S. Sees IPO Market Share Slip

Researchers from Ohio State University have penned an intriguing paper that shows the evolution of IPO activity across countries. Their startling assessment? The research indicates that during the 2000s, IPOs in the US did not hold their ground.

The authors of the working paper – Craig Doidge, Andrew Karolyi and René Stulz – sampled more than 29,000 IPOs from 89 countries amounting to almost $2.6 tn of capital raised from 1990 to 2007. While US firms rank at the top of the list for IPO activity, the paper indicates the US has lost sight of the economic importance of IPOs.

‘In the 1990s, the yearly average of the number of US IPOs comprised 26.7 per cent of all IPOs in the world, while the US accounted for 27 per cent of world GDP,’ the report states. ‘Since 2000, the US share of all IPOs has fallen to 11.7 per cent whereas its share of worldwide GDP has averaged 30 per cent.’

The researchers go on to say that in the last five years of the sample study, total US IPO proceeds decreased compared with worldwide IPO activity. Other countries simply put more attention on IPOs, fueling a growth in global IPO emergence that has allowed shares to be sold in the home country and abroad. The reason? The paper concludes that countries with poorer laws, markets and national institutions with less government influence have an easier time leveraging the activity of IPOs.

Source: The Harvard Law School Forum