Learning and staged equity financing

Magnus Blomkvist (), Timo Korkeamäki () and Tuomas Takalo
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Magnus Blomkvist: Audencia Business School
Timo Korkeamäki: Aalto University

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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 3,625 U.S. IPOs between 1980-2018.

Keywords: IPOs; security issuance; sequential financing IPOs; sequential financing (search for similar items in EconPapers)
Date: 2022-05-07
New Economics Papers: this item is included in nep-cfn
Note: View the original document on HAL open archive server: https://hal.science/hal-03676319
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Published in Journal of Corporate Finance, 2022, pp.102217. ⟨10.1016/j.jcorpfin.2022.102217⟩

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Journal Article: Learning and staged equity financing (2022)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-03676319

DOI: 10.1016/j.jcorpfin.2022.102217

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