To Be or Not to Be (Public)
Sreedhar T. Bharath
Arizona State University - W.P. Carey School of Business
Amy K. Dittmar
University of Michigan at Ann Arbor - Stephen M. Ross School of Business
University of Michigan Ross School of Business Research Paper
EFA 2007 Ljubljana Meetings Paper
AFA 2008 New Orleans Meetings Paper
Why do firms go public? Despite the existence of many theories addressing this question, lack of data on private firms before they are public hampers our ability to test these theories. We circumvent this challenge by testing reverse predictions of going public theories using firms' decisions to go private. We employ a comprehensive sample of going private transactions from 1980-2004 in the U.S. and examine how these firms differ at the initial public offering and over their public life relative to a sample of firms that went and remained public. We find that many of the factors that drive the firms to go private are evident at the initial public offering. Our results provide strong support for the importance of information and liquidity considerations in being a public firm.
Number of Pages in PDF File: 58
Keywords: Going Public, Going Private
JEL Classification: G10, G30, G32, G34, G31working papers series
Date posted: August 4, 2006
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