On the Decision to Go Public: Evidence from Privately-held Firms

47 Pages Posted: 23 Apr 2001  

Alexander Ljungqvist

New York University (NYU) - Department of Finance; National Bureau of Economic Research (NBER); Centre for Economic Policy Research (CEPR); European Corporate Governance Institute (ECGI); Research Institute of Industrial Economics (IFN)

Ekkehart Boehmer

Singapore Management University - Lee Kong Chian School of Business

Multiple version iconThere are 3 versions of this paper

Date Written: February 12, 2004

Abstract

We test recent theories of when companies go public which predict that 1) more companies will go public when outside valuations are high or have increased, 2) companies prefer going public when uncertainty about their future profitability is high, and 3) firms whose controlling shareholders enjoy large private benefits of control are less likely to go public. Our analysis tracks a set of 330 privately held German firms which between 1984 and 1995 announced their intention to go public to see whether, when, and how they subsequently sold equity to outside investors. Controlling for private benefits, we find that the likelihood of firms completing an initial public offering increases in the firm's investment opportunities and valuations. We also show that these effects are distinct from factors that increase firms' demand for outside capital more generally.

Keywords: Going public decision; IPO timing; Private benefits; Family firms.

JEL Classification: G32

Suggested Citation

Ljungqvist, Alexander and Boehmer, Ekkehart, On the Decision to Go Public: Evidence from Privately-held Firms (February 12, 2004). Available at SSRN: https://ssrn.com/abstract=266993 or http://dx.doi.org/10.2139/ssrn.266993

Alexander Ljungqvist

New York University (NYU) - Department of Finance ( email )

Stern School of Business
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HOME PAGE: http://pages.stern.nyu.edu/~aljungqv

National Bureau of Economic Research (NBER) ( email )

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Cambridge, MA 02138
United States

Centre for Economic Policy Research (CEPR)

77 Bastwick Street
London, EC1V 3PZ
United Kingdom

European Corporate Governance Institute (ECGI)

c/o ECARES ULB CP 114
B-1050 Brussels
Belgium

Research Institute of Industrial Economics (IFN) ( email )

Box 55665
Grevgatan 34, 2nd floor
Stockholm, SE-102 15
Sweden

Ekkehart Boehmer (Contact Author)

Singapore Management University - Lee Kong Chian School of Business ( email )

Singapore

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