Stock Market Development and the Financing Role of IPOs in Acquisitions

39 Pages Posted: 8 Sep 2016 Last revised: 21 Sep 2018

See all articles by Nihat Aktas

Nihat Aktas

WHU - Otto Beisheim School of Management

Kathleen Andries

WHU - Otto Beisheim School of Management

Ettore Croci

Catholic University of the Sacred Heart of Milan

Ali Ozdakak

WHU - Otto Beisheim School of Management

Date Written: September 9, 2018

Abstract

We examine the role of IPOs as a source of financing by comparing firms from countries with different degrees of stock market development. Focusing on acquisition investments, our results suggest that firms operating in economies with a more developed stock market extract more benefits from the financing role of IPOs than firms from countries with a less developed stock market. Controlling for the importance of bank financing does not alter our main findings. IPO firms from market-focused countries also experience a relatively larger increase in size and in profitability in the post-IPO period. Our results indicate that the purpose of IPO financing varies with the financial system in general and with the degree of stock market development in particular

Keywords: stock market development, bank-based financial system, merger and acquisition, IPO, financial constraint

JEL Classification: G32, G34

Suggested Citation

Aktas, Nihat and Andries, Kathleen and Croci, Ettore and Ozdakak, Ali, Stock Market Development and the Financing Role of IPOs in Acquisitions (September 9, 2018). Available at SSRN: https://ssrn.com/abstract=2835972 or http://dx.doi.org/10.2139/ssrn.2835972

Nihat Aktas (Contact Author)

WHU - Otto Beisheim School of Management ( email )

Burgplatz 2
Vallendar, 56179
Germany

Kathleen Andries

WHU - Otto Beisheim School of Management ( email )

Burgplatz 2
Vallendar, 56179
Germany

Ettore Croci

Catholic University of the Sacred Heart of Milan ( email )

Largo Gemelli, 1
Via Necchi 9
Milan, MI 20123
Italy

Ali Ozdakak

WHU - Otto Beisheim School of Management ( email )

Burgplatz 2
Vallendar, 56179
Germany

Register to save articles to
your library

Register

Paper statistics

Downloads
171
Abstract Views
790
rank
180,322
PlumX Metrics