Maybe not if a new paper by, inter alia, Brian Cheffins is correct. In it, he and his coauthors argue that:
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 quotations on the London Stock Exchange performed as well as Berlin IPOs despite the Berlin market being more extensively regulated than the laissez faire London market. Moreover, the IPO failure rate on these two stock markets was lower than it was with better regulated US IPOs later in the 20th century.
Citation: Chambers, David, Burhop, Carsten and Cheffins, Brian R., Is Regulation Essential to Stock Market Development? Going Public in London and Berlin, 1900-1913 (July 12, 2011). Available at SSRN: http://ssrn.com/abstract=1884190
