Anti-collusion leniency legislations and IPO activity: worldwide evidence

We study the impact of the staggered adoption of anti-collusion leniency legislations around the world on IPO activity. We document that the passage of leniency legislations prompts IPO activity. The effect is amplified in more concentrated industries, while it is mitigated in countries with more stringent competition laws in place and countries in which investors have a lower ability to diversify risk in the financial market. Collectively, these findings are consistent with the view that, by enhancing product market competition, leniency legislations increase the benefits for firms from going public, resulting in higher IPO activity. The results of supplemental analyses suggest that the passage of leniency legislations leads to less underpriced IPOs and a more efficient use of IPO proceeds, and prompts firms with less proprietary information to go public.