45 Pages Posted: 2 Mar 2002
Date Written: February 2002
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: 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