Why Wait? A Century of Life Before IPO
Firms that entered the stock market in the 1990s were younger than any earlier cohort since World War I. Surprisingly, however, firms that IPO'd at the close of the 19th century were just as young as the companies that are entering today. We argue here that the electrification-era and the IT-era firms came in young because the technologies that they brought in were too productive to be kept out very long. The model assumes that the stage before IPO is a learning period during which the firm refines the idea before committing to it at the IPO stage. The better the idea, the higher is the opportunity cost of a delay in its implementation, and the earlier the firm will have its IPO.
|Date of creation:||Jan 2001|
|Date of revision:|
|Publication status:||published as Jovanovic, Boyan and Peter L. Rousseau. "Why Wait? A Century O Flife Before IPO," American Economic Review, 2001, v91(2,May), 336-341.|
|Note:||CF DAE PR|
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- Prescott, Edward C & Visscher, Michael, 1980. "Organization Capital," Journal of Political Economy, University of Chicago Press, vol. 88(3), pages 446-61, June.
- Boyan Jovanovic & Yaw Nyarko, 1994.
"Learning By Doing and the Choice of Technology,"
NBER Working Papers
4739, National Bureau of Economic Research, Inc.
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