haku: @indexterm initial public offerings / yhteensä: 176
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| Tekijä: | Chemmanur, T.J. He, J. |
| Otsikko: | IPO waves, product market competition and the going public decision: theory and evidence |
| Lehti: | Journal of Financial Economics
2011 : AUG, VOL. 101:2, p. 382-412 |
| Asiasana: | initial public offerings competition financing decision making productivity models |
| Kieli: | eng |
| Tiivistelmä: | We develop a new foundation for initial public offering (IPO) waves based on product market considerations. Two firms with differing productivity levels engage in competition in an industry with a substantial probability of a positive productivity shock. Going public, costly as it may be, not only allows a firm to raise cheap external capital, but also enables it to grab market share from its private-staying competitors. The decision to go public versus remain private and the optimal timing of doing it is solved in the point of view of each firm. In equilibrium, even firms with decent internal capital to fund their new investment may go public, driven by the chance of their product market competitors going public. IPO waves may arise in equilibrium even in industries not experiencing a productivity shock. The model predicts that firms going public with an IPO wave will have lower productivity and post-IPO profitability but larger cash holdings than the ones that go public off the wave; it makes similar predictions for firms going public later versus earlier in an IPO wave. Empirical tests find support for these predictions. |
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