IDEAS home Printed from https://ideas.repec.org/a/oup/rfinst/v38y2025i8p2467-2514..html
   My bibliography  Save this article

The Effects of Going Public on Firm Profitability and Strategy

Author

Listed:
  • Borja Larrain
  • Gordon M Phillips
  • Giorgo Sertsios
  • Francisco Urzúa

Abstract

We study the effects of going public using a unique panel of firms in 16 European countries for which we observe financial data before and after initial public offering (IPO) attempts. We compare completed and withdrawn IPO attempts. We instrument the decision to complete the IPO using prior market returns. After instrumenting, we isolate a positive causal effect of going public on profitability. We also find a post-IPO expansion in sales per employee, subsidiaries, and countries in which firms operate. Overall, our results are consistent with going public relaxing financial constraints and inducing a shift in strategy towards increased commercialization.

Suggested Citation

  • Borja Larrain & Gordon M Phillips & Giorgo Sertsios & Francisco Urzúa, 2025. "The Effects of Going Public on Firm Profitability and Strategy," The Review of Financial Studies, Society for Financial Studies, vol. 38(8), pages 2467-2514.
    • Handle: RePEc:oup:rfinst:v:38:y:2025:i:8:p:2467-2514.
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1093/rfs/hhaf026
    Download Restriction: Access to full text is restricted to subscribers.
    ---><---

    As the access to this document is restricted, you may want to

    for a different version of it.

    More about this item

    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

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:oup:rfinst:v:38:y:2025:i:8:p:2467-2514.. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Oxford University Press (email available below). General contact details of provider: https://edirc.repec.org/data/sfsssea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.