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Do IPO Firms Become Myopic?

Author

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  • Vojislav Maksimovic
  • Gordon Phillips
  • Liu Yang

Abstract

We compare the growth and responsiveness to demand shocks of post-initial public offering (IPO) firms and their private counterparts. Using multiple measures of myopia and multiple ways to match IPO firms with private firms, we do not find evidence of myopic behavior by public firms. IPO firms respond more to investment opportunities and have higher productivity in their early public years. Our results on public firms’ sensitivity to growth opportunities hold under several robustness tests, including when we consider firms’ total growth including acquisitions. The results show the importance of matching public to private firms early in their life.

Suggested Citation

  • Vojislav Maksimovic & Gordon Phillips & Liu Yang, 2023. "Do IPO Firms Become Myopic?," Review of Finance, European Finance Association, vol. 27(3), pages 765-807.
    • Handle: RePEc:oup:revfin:v:27:y:2023:i:3:p:765-807.
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    More about this item

    Keywords

    Initial public offerings (IPOs); Public and private firms; Myopic; Myopia; Underlying quality;
    All these keywords.

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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