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The IPO Decision
Author: Jason Draho
Publisher: Edward Elgar Publishing
Published: 2004-01-01
Total Pages: 400
ISBN-13: 9781781008782
DOWNLOAD EBOOK →Annotation Initial public offerings (IPOs) garnered unprecedented positive attention in the 1990s for their spectacular returns and central role in entrepreneurial activity. Subsequent revelations of unscrupulous IPO allocation and promotion practices cast a less fa.
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Can I Remain a Unicorn
The JOBS Act and IPO Volume
Author: Michael Dambra
Publisher:
Published: 2016
Total Pages: 51
ISBN-13:
DOWNLOAD EBOOK →In April 2012, the JOBS Act was passed to help revitalize the IPO market, especially for small firms. During the year ending March 2014, IPO volume and proportion of small firm issuers was the largest since 2000. Controlling for market conditions, we estimate that the JOBS Act has led to 21 additional IPOs annually, a 25% increase over pre-JOBS levels. Firms with high proprietary disclosure costs, such as biotechnology and pharmaceutical firms, increase IPO activity most. These firms are also more likely to take advantage of the Act's de-risking provisions, allowing firms to file the IPO confidentially while testing-the-waters.
Entrepreneurial Learning, the IPO Decision, and the Post-IPO Drop in Firm Profitability
Author: Lubos̆ Pástor
Publisher:
Published: 2006
Total Pages: 45
ISBN-13:
DOWNLOAD EBOOK →We develop a model in which an entrepreneur learns about the average profitability of a private firm before deciding whether to take the firm public. In this decision, the entrepreneur trades off diversification benefits of going public against benefits of private control. The model predicts that firm profitability should decline after the IPO, on average, and that this decline should be larger for firms with more volatile profitability and firms with less uncertain average profitability. These predictions are supported empirically in a sample of 7,183 IPOs in the U.S. between 1975 and 2004.
Entrepreneurial Learning, the IPO Decision, and the Post-Ipo Drop in Firm Profitability
Author: Lubos Pastor
Publisher:
Published: 2014
Total Pages: 47
ISBN-13:
DOWNLOAD EBOOK →We develop a model in which an entrepreneur learns about the average profitability of a private firm before deciding whether to take the firm public. In this decision, the entrepreneur trades off diversification benefits of going public against benefits of private control. The model predicts that firm profitability should decline after the IPO, on average, and that this decline should be larger for firms with more volatile profitability and firms with less uncertain average profitability. These predictions are supported empirically in a sample of 7,183 IPOs in the U.S. between 1975 and 2004.
Pre‑Ipo Operational and Financial Decisions
Author: Volodymyr Babich
Publisher:
Published: 2012
Total Pages:
ISBN-13:
DOWNLOAD EBOOK →Many owners of growing privately-held firms make operational and financial decisions in an effort to maximize the expected present value of the proceeds from an Initial Public Offering (IPO). We ask: What is the right time to make an IPO and How should operational and financial decisions be coordinated to increase the likelihood of a successful IPO Financial and operational decisions in this problem are linked because adequate financial capital is crucial for operational decisions to be feasible and operational decisions affect the firm's access to financial resources. The IPO event is treated as a stopping time in an infinite-horizon discounted Markov decision process. Unlike traditional stopping time models, at every stage the model includes other decisions such as production, sales and loan size. The results include (1) characterization of an optimal capacity-expansion policy, (2) sufficient conditions for a monotone threshold rule to yield an optimal IPO decision, and (3) algorithmic implications of results in (1) and (2).
Market Making Contracts, Firm Value, and the IPO Decision
Author: Hendrik Bessembinder
Publisher:
Published: 2017
Total Pages: 44
ISBN-13:
DOWNLOAD EBOOK →We examine the effects of secondary market liquidity on firm value and the decision to conduct an Initial Public Offering (IPO). Competitive liquidity provision can lead to market failure as the IPO either does not occur or the IPO price is discounted to reflect that some welfare-enhancing secondary trades do not occur. Market failure arises when uncertainty regarding fundamental value and asymmetric information are large in combination. In these cases, firm value and social welfare are improved by a contract where the firm engages a Designated Market Maker (DMM) to enhance liquidity. Our model implies that such contracts represent a market solution to a market imperfection, particularly for small growth firms. In contrast, proposals to encourage IPOs by use of a larger tick size are likely to be counterproductive.
