Financial centre bias in primary equity markets

This paper shows that firms from financial centres are more likely to go public than their provincial counterparts. The financial centre bias is analysed for 32 countries, including the European Union, the USA and Japan. It is particularly strong in countries with underdeveloped stock markets and closed corporate governance regimes, but it is still present in countries with the most developed stock markets and most open corporate governance, such as the UK and the USA. Potential reasons for the bias include the benefits of issuers' proximity to Initial Public Offerings intermediaries and specialised labour markets, corporate governance incentives and institutional factors.