This study of initial public offerings (IPOs) carried out on the Berlin and London stock exchanges between 1900 and 1913 casts doubt on the received "law and finance" wisdom that legally mandated investor protection is pivotal to the development of capital markets. IPOs that resulted in official...

We revisit debates on the regulation of IPOs by analyzing failure rates of IPOs carried out between 1900 and 1913 on the London and Berlin stock exchanges, two of the leading financial markets during the early 20th century. IPOs were regulated more heavily in Germany than in Britain and, as...