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In this section, we review the empirical evidence on the survival rates of IPO survival in aftermarket from different countries. The relatively scant literature on IPO survival has almost exclusively focused on the determinants of survival of newly listed firms. Moreover, much of the literature pertains to the US market and is reviewed first. Schultz (1993) examines the survival of unit and shares IPOs for a sample of 797 issuing firms from 1986-1988. He reports that after three years from the date of IPO, the survival rates for share IPOs are 89 percent compared to 59 percent for the unit IPOs. He argues that higher delisting rates for the unit IPOs are a result of agency problems on the part of unit IPO firms. Hensler et al. (1997) report a delisting (failure) rate of 28 percent after five years from the initial listing date for US IPOs from 1975 to 1984. Seguin and Smoller (1997) compare the mortality of low-priced (penny) shares with high-priced shares and find that penny shares are three times more likely to delist from the market for negative reasons than high-priced shares. The five year failure rates for low-priced stocks are 47 percent compared to 17 percent for high-priced shares in sample of 5896 IPOs listed on NASDAQ from 1974 to 1988. Comparing the survival profile of VC backed and non-VC backed IPOs in the US from 1977-1990, Jain and Kini (2000) find higher post-IPO survival rates for the former group. They report that the cumulative failure rates within five years of IPO are 25.5 percent for VC backed IPOs compared with 30 percent for non-VC backed IPOs. Fama and French (2004) examine the characteristics of the newly listed firms in US from 1973-1991 and report that 10 year failure rates for their sample IPOs are

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58.5 percent. They suggest that higher delisting rates are mainly due to the increased number of firms with lower profitability and high growth, issuing public equity. Demers and Joos (2007) examine the comparative failure rates for the high-tech and non-tech IPOs listed in US from years 1980 to 2000. They find that non-tech IPOs have higher failure rates of 16.7 percent compared to the 9.2 percent for high-tech IPOs. Demers and Joos further suggest that financial accounting variables, mostly overlooked by previous studies, play important role in assessing failure risk of IPOs. In another, study of US IPOs from 1985-2005, Kooli and Meknassi (2007) report that only 55.18 percent of the issuing firms are listed independently after five years of IPO. They treat acquisitions differently from other delistings and show that 24.59 percent of IPOs in their sample are acquired and 20.23 percent get delisted due to other negative reasons within five years of IPO. Jain and Kini (2008) report a failure rate of 35 percent after 5th anniversary of issuing firms for IPOs issued between 1980 and 1997 in the US. They find that IPO firms with commitment to R&D spending and a diversified product line increase the viability of issuing firms for longer time. Bhattacharya et al. (2010), in a study focusing on internet IPOs, find that 24 percent of internet companies fail within five years of their listing dates. They also report failure rates of 14.3 percent and 18.2 percent for high-tech companies and firms listed on NASDAQ respectively. In a recent study of US IPOs for the period 1980-2003, Chou et al. (2013) show that only 11 percent of their sample IPOs delist within five years of their listing date for performance related problems (liquidations, financial distress, insufficient capital etc.). The reason for comparatively low failure rate reported by Chou et al. is that they do not include mergers and acquisitions in their definition of delisting.

There is paucity of empirical literature on IPO survival outside the US markets. For example, there are a handful of recently published studies on IPO survival for the UK market and

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failure rates of UK IPOs have been mentioned in some related studies. Gregory et al. (2010), for instance, study the long-run performance of IPOs listed on LSE during 1975-2004. They briefly report the proportion of firms in their sample that are delisted due to ‘bankruptcy’ over the three and five years after the IPO. Their classification of bankruptcy includes firms delisted due to liquidations or administrative receiverships. They report that five year attrition rates for companies listed on the Main Market and AIM are 3.6 percent and 9.5 percent respectively. Espenlaub et al. (2012) relate survival of AIM IPOs to the reputation of nominated advisors (NOMADS) for a sample of 896 IPOs during 1995-2004. They find that failure rates of IPOs on AIM are 26 percent and 41 percent respectively for three and five post IPO years. They further conclude that delisting rates in their study are comparable to the ones reported for US and Canadian markets. Similarly, Kashefi Pour and Lasfer (2013) study the voluntary delisting from LSE AIM for the period 1995-2009. Although, they do not report the survival or failure rates for their sample IPOs, they show voluntary delisting accounts for 44 percent of their total delisted sample firms. Their findings suggest firms that delist voluntarily come to the market to rebalance their leverage rather than financing their growth opportunities; but these firms leave the market voluntarily when they fail to benefit from listing. Ahmad and Jelic (2014) focus on Main Market IPOs and examine the survival of IPOs in relation to the lockup agreements. Their study is by far the exclusive and comprehensive analysis of IPO survival on the LSE Main market. They report that the five year failure rate for their sample IPOs form 1990-2006 is 31 percent, which is comparable to the US evidence discussed earlier. They also find that survival rates and times of IPOs with longer lockups are consistently better than that those of with shorter lockups.

Although there was a spate of recent studies on survival of IPOs in UK, other non-US markets remain relatively ignored. The other markets with notable IPO survival studies include

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Canada, Australia and Taiwan. For instance, Carpentier and Suret (2011) examine the survival of penny stock IPOs on the Canadian stock market for the period 1986-2003. They find that 11.60 percent of their sample IPOs delist within five years following the IPO. They show that the failure rate of penny stocks in Canada is comparatively lower than that of US penny stocks reported in (Bradley et al., 2006). Carpentier and Suret, however, further classify their surviving firms into successful and unsuccessful; where successful surviving IPOs include those which have been transferred to a higher tier market or cross listed in the US exchanges. They find that only about 7% of their sample IPOs can be categorised as surviving successful firms. Chancharat et al. (2012) analyse the survival of Australian new economy (small firms with high growth opportunities) IPOs and relate it to the board structure of these IPOs. Their sample consists of 125 IPOs between 1994 and 2002 and they find that 25.60 percent of their sample IPOs delist from the market within five years of their listing date. They also report that the board independence increases the likelihood of corporate survival. Finally, Yang and Sheu (2006) study the survival of IPOs listed on the Taiwan stock market from 1992 to 2000. They report that 38 out of their 560 sample IPOs do not survive after three years of IPO which equates to a failure rate of 6.7 percent. The relatively lower failure rate is due to the reason that they only consider IPOs delisted due to the negative reasons and do not account for mergers and acquisitions as delisted IPOs. Their results also suggest that likelihood of IPO survival first decreases and then increases with the percentage of insider ownership at the time of listing.

The above discussion summarises survival rates of newly listed firms mainly in the US and other countries including UK, Canada, Australia and Taiwan. The reported failure rates for US market range from 9 percent to 47 percent over five years following the listing. The variation in failure rates is mainly because of different sample periods, different sub-samples

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(high-tech vs non-tech, VC vs non-VC backed etc.) and difference in definition of survivors and non-survivors. Some studies treat merger and acquisitions as delisted firms (Jain and Kini, 2000) while others treat them separately from survivors or non-survivors (Bhattacharya et al., 2011) or exclude these firms altogether (Hensler et al., 1997). Similarly, failure rates for IPOs in UK range from almost 4 percent to 41 percent after five post-IPO years depending on the segment of the market (Main or AIM) and the definition on non-survivors. In next section, we discuss the determinants of survival (failure) of IPOs in the aftermarket.