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Moving from Private to Public Ownership: Selling Out to Public Firms versus Initial Public Offerings

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  • Annette B. Poulsen
  • Mike Stegemoller

Abstract

We study two alternative means to move assets from private to public ownership: through the acquisition of private companies by firms that are public (sellouts) or through initial public share offerings (IPOs). We consider firm‐specific characteristics for 1,074 IPO and 735 sellout firms to identify differences in growth, capital constraints, and asymmetric information between the two types of transactions. Our results suggest that firms move to public ownership through an IPO when they have greater growth opportunities and face more capital constraints. We provide a better understanding of the firm‐specific characteristics that lead firms to go public.

Suggested Citation

  • Annette B. Poulsen & Mike Stegemoller, 2008. "Moving from Private to Public Ownership: Selling Out to Public Firms versus Initial Public Offerings," Financial Management, Financial Management Association International, vol. 37(1), pages 81-101, March.
  • Handle: RePEc:bla:finmgt:v:37:y:2008:i:1:p:81-101
    DOI: 10.1111/j.1755-053X.2008.00005.x
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