Credit Crunch and Timing of Initial Public Offerings

54 Pages Posted: 5 Jan 2018 Last revised: 23 Sep 2018

See all articles by Pengda Fan

Pengda Fan

Graduate School of Economics, Kyushu University

Konari Uchida

Kyushu University - Faculty of Economics

Date Written: January 1, 2018

Abstract

We show evidence that firms with more outstanding short-term debt are more likely to go public in bear markets than firms with less short-term debt. Importantly, this finding is evident for firms going public after a reduction of total bank credits in the loan market. The result is robust to control for endogeneity concerns, selection biases, and alternative stories. Bear market IPOs repay more short-term debt during the IPO year than other IPOs do, and have lower offering prices and proceeds. Those results suggest that a credit crunch significantly affects timing and costs of IPOs.

Keywords: IPO; Credit Crunch; Bear Markets; Market Timing; Financial Distress

JEL Classification: G21; G30; G31

Suggested Citation

Fan, Pengda and Uchida, Konari, Credit Crunch and Timing of Initial Public Offerings (January 1, 2018). Pacific-Basin Finance Journal, Forthcoming . Available at SSRN: https://ssrn.com/abstract=3095815 or http://dx.doi.org/10.2139/ssrn.3095815

Pengda Fan

Graduate School of Economics, Kyushu University

6-19-1, Hakozaki, Higashiku
Fukuoka, Fukuoka 812-8581
Japan

Konari Uchida (Contact Author)

Kyushu University - Faculty of Economics ( email )

6-19-1, Hakozaki
Higashi-ku
Fukuoka, Fukuoka 8128581
Japan

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