The Impact of Reputable Law Firms on IPO Underpricing in Developing Countries

The purpose of this research is to evaluate the effect of issuing businesses engaging reputed law firms on the extent of underpricing in developing IPO markets. The consequences of involving prestigious lawyers in underpricing IPO businesses are not really understood from a global viewpoint due to the lack of research on this topic. This study provides the first empirical investigation on the role of reputable law firms in the underpricing of IPO firms in developing IPO markets. It expands on Moran and Pandes' (2019) work, which was previously focused on the US IPO market. We analyze a large dataset of 6,869 newly and publicly traded firms in ten developing markets between January 1995 and December 2019. Discovered here is that IPO issuers do certainly benefit from engaging reputed attorneys to: firstly, verify their quality in order to alleviate investors' ex-ante uncertainty; and secondly, protect their offers from being significantly underpriced. Our findings have ramifications for IPO founders, investors, academics, and policymakers