The Choice of IPO versus Takeover: Empirical Evidence
AbstractWe examine factors that influence the choice between an initial public offering (IPO) and a takeover by a public acquirer. Our results show that the industry concentration, high-tech industry affiliation, current cost of debt, relative "hotness" of the IPO market, firm size, and insider ownership percentage are all positively related to the probability of an IPO. In contrast, private companies in high market-to-book industries, financial service sectors, highly leveraged industries, and deals involving greater liquidity for selling insiders show a stronger likelihood for takeovers. Our findings also indicate that a liquidity discount exists in takeovers relative to IPOs.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoArticle provided by University of Chicago Press in its journal Journal of Business.
Volume (Year): 76 (2003)
Issue (Month): 4 (October)
Contact details of provider:
Web page: http://www.journals.uchicago.edu/JB/
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- De, Soumendra & Jindra, Jan, 2012. "Why newly listed firms become acquisition targets," Journal of Banking & Finance, Elsevier, vol. 36(9), pages 2616-2631.
- Ninon Kohers, 2004. "Acquisitions of private targets: the unique shareholder wealth implications," Applied Financial Economics, Taylor & Francis Journals, vol. 14(16), pages 1151-1165.
- Guillermo Yañez & Carlos Maquieira, 2009. "Rendimiento de Ofertas Públicas Iniciales de Acciones en Chile: Evidencia Empírica entre 1994 y 2007," Serie de Documentos de Trabajo 02, Superintendencia de Valores y Seguros.
- Marco Da Rin & Giovanna Nicodano & Alessandro Sembenelli, 2004.
"Public Policy and the Creation of Active Venture Capital Markets,"
270, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
- Da Rin, Marco & Nicodano, Giovanna & Sembenelli, Alessandro, 2006. "Public policy and the creation of active venture capital markets," Journal of Public Economics, Elsevier, vol. 90(8-9), pages 1699-1723, September.
- Da Rin, Marco & Nicodano, Giovanna & Sembenelli, Alessandro, 2005. "Public policy and the creation of active venture capital markets," Working Paper Series 0430, European Central Bank.
- Da Rin, M. & Nicodano, G. & Sembenelli, A., 2006. "Public policy and the creation of active venture capital markets," Open Access publications from Tilburg University urn:nbn:nl:ui:12-192935, Tilburg University.
- Thorsten V. Braun & Sebastian Krispin & Erik E. Lehmann, 2009.
"Entrepreneurial Human Capital, Complementary Assets, and Takeover Probability,"
Discussion Paper Series
307, Universitaet Augsburg, Institute for Economics.
- Erik Lehmann & Thorsten Braun & Sebastian Krispin, 2012. "Entrepreneurial human capital, complementary assets, and takeover probability," The Journal of Technology Transfer, Springer, vol. 37(5), pages 589-608, October.
- Braun, Thorsten V. & Krispin, Sebastian & Lehmann, Erik E., 2010. "Entrepreneurial human capital, complementary assets, and takeover probability," UO Working Papers 03-10, University of Augsburg, Chair of Management and Organization.
- Iftekhar Hasan & Haizhi Wang, 2008. "The US bankruptcy law and private equity financing: empirical evidence," Small Business Economics, Springer, vol. 31(1), pages 5-19, June.
- Mantecon, Tomas, 2008. "An analysis of the implications of uncertainty and agency problems on the wealth effects to acquirers of private firms," Journal of Banking & Finance, Elsevier, vol. 32(5), pages 892-905, May.
- Frantzeskakis, Kyriakos & Ueda, Masako, 2007. "A Dynamic Equilibrium Model of Firm's Life Cycle and Mergers as Efficient Reallocation," CEPR Discussion Papers 6079, C.E.P.R. Discussion Papers.
- Reuer, Jeffrey J. & Shen, Jung-Chin, 2004. "Sequential divestiture through initial public offerings," Journal of Economic Behavior & Organization, Elsevier, vol. 54(2), pages 249-266, June.
- Tomas Mantecon & Paul Thistle, 2011. "The IPO market as a screening device and the going public decision: evidence from acquisitions of privately and publicly held firms," Review of Quantitative Finance and Accounting, Springer, vol. 37(3), pages 325-361, October.
- Nahata, Rajarishi, 2008. "Venture capital reputation and investment performance," Journal of Financial Economics, Elsevier, vol. 90(2), pages 127-151, November.
- Wang, Lanfang & Wang, Susheng, 2011. "Cross-border venture capital performance: Evidence from China," Pacific-Basin Finance Journal, Elsevier, vol. 19(1), pages 71-97, January.
- Jean Helwege & Frank Packer, 2008. "Private matters," BIS Working Papers 266, Bank for International Settlements.
- Bharat A. Jain & Omesh Kini, 2006. "Industry clustering of initial public offerings," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 27(1), pages 1-20.
- Bayar, Onur & Chemmanur, Thomas J., 2012. "What drives the valuation premium in IPOs versus acquisitions? An empirical analysis," Journal of Corporate Finance, Elsevier, vol. 18(3), pages 451-475.
- Helwege, Jean & Packer, Frank, 2009. "Private matters," Journal of Financial Intermediation, Elsevier, vol. 18(3), pages 362-383, July.
- Brau, James C. & Sutton, Ninon K. & Hatch, Nile W., 2010. "Dual-track versus single-track sell-outs: An empirical analysis of competing harvest strategies," Journal of Business Venturing, Elsevier, vol. 25(4), pages 389-402, July.
- Richard J. Rosen & Scott B. Smart & Chad J. Zutter, 2005. "Why do firms go public? evidence from the banking industry," Working Paper Series WP-05-17, Federal Reserve Bank of Chicago.
- Mayur, Manas & Kumar, Manoj, 2006. "An Empirical Investigation of Going Public Decision of Indian Companies," MPRA Paper 1801, University Library of Munich, Germany.
- Tian, Xuan, 2011. "The causes and consequences of venture capital stage financing," Journal of Financial Economics, Elsevier, vol. 101(1), pages 132-159, July.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Journals Division).
If references are entirely missing, you can add them using this form.