Stock market development and the financing role of IPOs in acquisitions
Ettore Croci and
Journal of Banking & Finance, 2019, vol. 98, issue C, 25-38
We examine the role of IPOs as a source of financing by comparing firms from countries with different degrees of stock market development. Focusing on acquisition investments, our results suggest that firms operating in economies with a more developed stock market extract more benefits from the financing role of IPOs than firms from countries with a less developed stock market. Controlling for the importance of bank financing does not alter our main findings. IPO firms from market-focused countries also experience a relatively larger increase in size and in profitability in the post-IPO period. Our results indicate that the purpose of IPO financing varies with the financial system in general and with the degree of stock market development in particular.
Keywords: Stock market development; Bank-based financial system; Merger and acquisition; Ipo; Financial constraint (search for similar items in EconPapers)
JEL-codes: G32 G34 (search for similar items in EconPapers)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jbfina:v:98:y:2019:i:c:p:25-38
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