Learning and staged equity financing

Magnus Blomkvist, Timo Korkeamäki and Tuomas Takalo

Journal of Corporate Finance, 2022, vol. 74, issue C

Abstract: We propose a rationale for why firms often return to the equity market shortly after their initial public offering (IPO). We argue that hard to value firms conduct smaller IPOs, and that they return to the equity market conditional on a positive valuation signal. This is driven by two-way learning, as market information complements both corporate disclosure and internal information available to management. In contrast to prior studies, we find that information asymmetry is not a necessary condition for staged financing. Our arguments receive support in a sample of 3625 U.S. IPOs between 1980 and 2018.

Keywords: IPOs; Security issuance; Sequential financing (search for similar items in EconPapers)
JEL-codes: G14 G24 G32 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:corfin:v:74:y:2022:i:c:s0929119922000608

DOI: 10.1016/j.jcorpfin.2022.102217

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