The Initial Public Offerings of Listed Firms
HEC Paris - Finance Department
York University - Schulich School of Business
July 22, 2005
AFA 2006 Boston Meetings, Forthcoming
EFA 2005 Moscow Meetings
Journal of Finance, Vol. 62, No. 1, p.447-479, 2007
A number of firms in the United Kingdom first list without issuing equity and then issue equity shortly thereafter. We argue that this two-stage offering strategy is less costly than an IPO because trading reduces the valuation uncertainty of these firms before they issue equity. We find that initial return is 10% to 30% lower for these firms than for comparable IPOs, and we provide evidence that the market in the firm's shares lowers financing costs. We also show that these firms time the market both when they list and when they issue equity.
Number of Pages in PDF File: 54
JEL Classification: G31
Date posted: February 16, 2005
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