Financing Decisions and Product Introductions of Private and Publicly Traded Firms

53 Pages Posted: 15 Oct 2014

See all articles by Gordon M. Phillips

Gordon M. Phillips

Dartmouth College - Tuck School of Business; National Bureau of Economic Research (NBER)

Giorgo Sertsios

Universidad de los Andes, Chile

Multiple version iconThere are 2 versions of this paper

Date Written: October 2014

Abstract

We exploit Medicare national coverage reimbursement approvals of medical devices as a quasi-natural experiment to investigate how private and publicly traded firm financing decisions and product introductions respond to exogenous changes in investment opportunities. We find that publicly traded companies increase their external financing, and their subsequent product introductions, by more than private companies in response to national coverage approvals. The primary source of the increased financing is through private financing of public firms. We also show that firms that select to go public during our sample period are ex ante more productive than similar private firms. The results are consistent with public firms bearing the costs of going public to gain financing advantages that come from being able to offer securities with better exit liquidity and lower price risk.

Suggested Citation

Phillips, Gordon M. and Sertsios, Giorgo, Financing Decisions and Product Introductions of Private and Publicly Traded Firms (October 2014). NBER Working Paper No. w20578. Available at SSRN: https://ssrn.com/abstract=2510566

Gordon M. Phillips (Contact Author)

Dartmouth College - Tuck School of Business ( email )

Hanover, NH 03755
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Giorgo Sertsios

Universidad de los Andes, Chile ( email )

Mons. Álvaro del Portillo
Las Condes
Santiago, 12.455
Chile

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