Access to Capital and the IPO Decision: An Analysis of US Private Firms

Andres Almazan (), Nathan Swem, Sheridan Titman () and Gregory Weitzner ()
Additional contact information
Andres Almazan: https://liberalarts.utexas.edu/economics/faculty/almazana
Nathan Swem: https://www.federalreserve.gov/econres/nathan-swem.htm

No 2025-102, Finance and Economics Discussion Series from Board of Governors of the Federal Reserve System (U.S.)

Abstract: We analyze firms' IPO decisions using detailed financial data on US private firms. We find that firms with higher external capital needs are more likely to go public. Following the IPO, firms increase their investment and debt issuance, resulting in leverage ratios close to their pre-IPO levels. Finally, newly public firms borrow from an expanded pool of lenders at improved terms, with a decrease in the within-firm dispersion in banks' private risk assessments. Our evidence is consistent with firms going public to improve their access to capital, which is facilitated by a reduction in asymmetric information.

Keywords: Bank debt; Capital structure; Asymmetric information; IPOs (search for similar items in EconPapers)
JEL-codes: G14 G32 (search for similar items in EconPapers)
Pages: 73 p.
Date: 2025-11-25
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Persistent link: https://EconPapers.repec.org/RePEc:fip:fedgfe:2025-102

DOI: 10.17016/FEDS.2025.102

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