Staged financing of newly public firms around the world

Azizjon Alimov () and Michael G. Hertzel ()
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Azizjon Alimov: Univ. Lille, CNRS, UMR 9221 - LEM - Lille Economie Management
Michael G. Hertzel: Arizona State University

Small Business Economics, 2024, vol. 63, issue 4, No 14, 1663 pages

Abstract: Abstract We investigate the prevalence of capital staging (sequential infusion of capital) in the IPO markets in 47 countries between 1991 and 2019. Our evidence is consistent with the hypothesis that investors provide funds to IPOs in stages to mitigate costs associated with firm-specific uncertainty about future prospects and information asymmetry. Going public firms with more intangible assets and greater R&D intensity raise less money relative to financing needs at the time of the IPO and are more likely to return to capital markets for subsequent financing and do so more frequently. We also document that the evidence of staged financing is stronger in countries that provide better legal protection to investors.

Keywords: Initial public offerings; Staging of capital; Uncertainty; Information asymmetry; International investor protection (search for similar items in EconPapers)
JEL-codes: F30 G24 G32 G34 G35 (search for similar items in EconPapers)
Date: 2024
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DOI: 10.1007/s11187-024-00901-7

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