IPO Decisions and the Costs of Going Public
24 Pages Posted: 16 Mar 2002
Date Written: February 28, 2002
Abstract
This paper analyses how the major decisions made by issuers affect the costs of an initial public offer. The results show that using reputed underwriters to raise a large amount of money with a low sterling price per share and a large placing component reduces direct issue costs. Issues that use reputed underwriters to raise a large amount of money by selling a high proportion of equity have higher indirect issue costs. In general, total issue costs increase in the proportion of shares sold but decrease with the quality of the sponsor, the amount raised, the price per share and the use of a placing.
JEL Classification: G00, G24, G30
Suggested Citation: Suggested Citation
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