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Credit crunch and timing of initial public offerings

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  • Fan, Pengda
  • Uchida, Konari

Abstract

We find that firms with more outstanding short-term debt are more likely to go public in bear markets than firms with less short-term debt. Importantly, this finding is evident for firms going public after a reduction of total bank credits in the loan market. Bear market IPOs repay more short-term debt during the IPO year than other IPOs do, and have lower offering prices and proceeds. These results suggest a credit crunch significantly affects the timing and costs of IPOs when firms owe significant short-term debt.

Suggested Citation

  • Fan, Pengda & Uchida, Konari, 2019. "Credit crunch and timing of initial public offerings," Pacific-Basin Finance Journal, Elsevier, vol. 53(C), pages 22-39.
  • Handle: RePEc:eee:pacfin:v:53:y:2019:i:c:p:22-39
    DOI: 10.1016/j.pacfin.2018.09.003
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    References listed on IDEAS

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    More about this item

    Keywords

    IPO; Credit crunch; Bear markets; Market timing; Financial distress;

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • G31 - Financial Economics - - Corporate Finance and Governance - - - Capital Budgeting; Fixed Investment and Inventory Studies

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