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Going Public to Grow? Evidence from a Panel of Italian Firms

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  • Robert Carpenter

    ()

  • Laura Rondi

    ()

Abstract

This paper investigates the consequences of the decision to go public for the growth of Italian firms using US firms as a benchmark for comparison. We find Italian firms conducting IPOs are larger than US firms, but raise fewer funds from the IPO and grow more slowly afterwards. We also compare Italian IPOs across time. Firms going public in the 1990s display features that are more similar to US IPOs. We describe changes to the Italian economy and financial markets that are potentially responsible for the change. We compare firms of different size and with different governance structures, and we find that they behave differently after going public. Our results suggest that going public does not guarantee faster growth or more jobs. As such, public policies that simply increase access to equity markets may not be effective unless they provide incentives for the firms’ decision-makers to use the new capital to grow. Copyright Springer 2006

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File URL: http://hdl.handle.net/10.1007/s11187-005-4323-3
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Bibliographic Info

Article provided by Springer in its journal Small Business Economics.

Volume (Year): 27 (2006)
Issue (Month): 4 (December)
Pages: 387-407

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Handle: RePEc:kap:sbusec:v:27:y:2006:i:4:p:387-407

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Web page: http://www.springerlink.com/link.asp?id=100338

Related research

Keywords: initial public offerings; going public; firm growth; business groups and small firms; Italian stock markets; G30; G32; L21; O16;

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References

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  1. Lucian Bebchuk & Reinier Kraakman & George Triantis, 1999. "Stock Pyramids, Cross-Ownership, and the Dual Class Equity: The Creation and Agency Costs of Seperating Control from Cash Flow Rights," NBER Working Papers 6951, National Bureau of Economic Research, Inc.
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Cited by:
  1. Nalinaksha Bhattacharyya & Julie Ann Elston & Laura Rondi, 2011. "Agency Issues in a Family Controlled Corporate Governance Structure The Case of Italy," CERIS Working Paper 201106, Institute for Economic Research on Firms and Growth - Moncalieri (TO).
  2. Carole Howorth & Andrea Moro, 2012. "Trustworthiness and interest rates: an empirical study of Italian SMEs," Small Business Economics, Springer, vol. 39(1), pages 161-177, July.
  3. Julie Ann Elston & Laura Rondi, 2006. "Shareholder Protection and the Cost of Capital Empirical Evidence from German and Italian Firms," CERIS Working Paper 200608, Institute for Economic Research on Firms and Growth - Moncalieri (TO).
  4. A. Bonaccorsi & S. Giannangeli, 2010. "One or more growth processes? Evidence from new Italian firms," Small Business Economics, Springer, vol. 35(2), pages 137-152, September.

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