The Effects of Going Public on Firm Performance and Commercialization Strategy: Evidence from International IPOs
Borja Larrain (),
Gordon Phillips,
Giorgo Sertsios and
Francisco Urzúa I.
No 29219, NBER Working Papers from National Bureau of Economic Research, Inc
Abstract:
We study the effects of going public using a unique panel of firms in 16 European countries for which we observe financial data before and after firms' initial-public-offering (IPO) attempts. We compare firms that complete their IPO with firms that withdraw their IPO. We instrument the going public decision using prior market returns. We find that firm profitability goes up after going public—contrary to previous results in the literature. We also find an post-IPO expansion in the number of subsidiaries and countries in which IPO firms operate. Our results are stronger for firms in financially dependent industries and in countries with higher investor protection consistent with going public relaxing financial constraints and with a stronger impact when agency conflicts are lower. Overall, our results are consistent with going public inducing a shift towards a strategy of commercialization to increase profitability.
JEL-codes: G32 (search for similar items in EconPapers)
Date: 2021-09
New Economics Papers: this item is included in nep-bec, nep-cfn and nep-isf
Note: CF
References: Add references at CitEc
Citations:
Downloads: (external link)
http://www.nber.org/papers/w29219.pdf (application/pdf)
Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
HTML/Text
Persistent link: https://EconPapers.repec.org/RePEc:nbr:nberwo:29219
Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w29219
Access Statistics for this paper
More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().