IPO Decisions and the Costs of Going Public

24 Pages Posted: 16 Mar 2002

See all articles by Kojo Menyah

Kojo Menyah

London Metropolitan University - Department of Accounting, Banking and Financial Systems (ABFS)

Krishna Paudyal

Independent

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

Menyah, Kojo and Paudyal, Krishna N., IPO Decisions and the Costs of Going Public (February 28, 2002). Available at SSRN: https://ssrn.com/abstract=302331 or http://dx.doi.org/10.2139/ssrn.302331

Kojo Menyah (Contact Author)

London Metropolitan University - Department of Accounting, Banking and Financial Systems (ABFS) ( email )

84 Moorgate
London EC2M 6SQ
United Kingdom
+44 (0)207 320 1535 (Phone)
+44 (0)207 320 1557 (Fax)

Krishna N. Paudyal

Independent ( email )

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