Structuring the IPO: Empirical Evidence on the Primary and Secondary Portion

45 Pages Posted: 2 Mar 2002  

Cynthia Van Hulle

KU Leuven - Department of Applied Economics

Nancy Huyghebaert

KU Leuven - Department of Accountancy, Finance and Insurance

Date Written: February 2002

Abstract

We empirically study the forces that drive the primary and secondary portion of the shares placed in public during IPOs. Simultaneously, the results shed additional light on the motives for going public. The data show that the need for additional equity underlies primary and combined offerings. Firms use combined offerings to enhance market liquidity, whereby information gathering by institutional investors is stimulated. Pre-allocation and post-IPO data on market liquidity and seasoned equity offerings support these arguments. Somewhat surprisingly, the diversification motive does not drive the size of the secondary portion; however, secondary offerings show relatively higher control turnover post-IPO.

Keywords: IPO structure, primary and secondary portion, motives

JEL Classification: G32, G24

Suggested Citation

Van Hulle, Cynthia and Huyghebaert, Nancy, Structuring the IPO: Empirical Evidence on the Primary and Secondary Portion (February 2002). EFA 2002 Berlin Meetings Presented Paper. Available at SSRN: https://ssrn.com/abstract=301800 or http://dx.doi.org/10.2139/ssrn.301800

Cynthia Van Hulle

KU Leuven - Department of Applied Economics ( email )

Naamsestraat 69
B-3000 Leuven
BELGIUM
32-16-326734 (Phone)
32-16-326732 (Fax)

Nancy Huyghebaert (Contact Author)

KU Leuven - Department of Accountancy, Finance and Insurance ( email )

Naamsestraat 69
B-3000 Leuven, 3000
Belgium
00 32 16326737 (Phone)
00 32 16326683 (Fax)

HOME PAGE: http://www.econ.kuleuven.be/eng/fetew/medewerker/Userpage.aspx?PID=524

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