"National Culture, Formal Institutions, and IPO Activity: A Cross-National Analysis"

Abstract

In this paper we explore the question of why some countries have more IPO activity than others. Previous studies examining determinants of international IPO activity have focused on formal institutions, such as investor protections. This paper builds on this prior work and incorporates differences in the national culture dimensions of performance orientation and uncertainty avoidance to explore differences in IPO activity for 42 countries from 2001 to 2011. Our empirical analysis indicates the national cultural dimensions of performance orientation and uncertainty avoidance are positively and negatively related to IPO activity respectively. We also demonstrate that the effects of the cultural dimensions on IPO activity are lessened when minority shareholder protections are stronger. This study provides useful theoretical and practical implications for enhancing understanding of how inside managers and outside investors are motivated or hindered to participate in IPO activity across the globe.