Public Listing Choice with Persistent Hidden Information

Francesco Celentano and Mark Rempel
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Francesco Celentano: University of Lausanne; Swiss Finance Institute

No 23-28, Swiss Finance Institute Research Paper Series from Swiss Finance Institute

Abstract: How much does firm intangibility amplify CEOs’ persistent private information and reduce firms’ public listing propensity? We develop a model of competing public and private investors financing firms heterogeneously exposed to persistent private cash flows. Equilibrium financing is driven by information rent differentials in CEO compensation. We validate and structurally estimate the model using firm listing and CEO compensation data. We find private (intangible) cash flows exhibit 63% higher persistence than their tangible counterparts. Further, if firm intangibility levels returned to those of 1980, mean listing propensities would increase 5 percentage points while mean CEO variable pay growth would decrease by 61%.

Keywords: intangible capital; public listings; persistent private information; CEO compensation; private equity premium; assignment model; structural estimation (search for similar items in EconPapers)
JEL-codes: C78 D86 E22 G32 M12 O33 (search for similar items in EconPapers)
Pages: 92 pages
Date: 2023-04
New Economics Papers: this item is included in nep-cfn
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Persistent link: https://EconPapers.repec.org/RePEc:chf:rpseri:rp2328

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