The Disappearing IPO Puzzle and the Shift Toward Acquisitions: New Insights from Proprietary U.S. Census Data on Private Firms

61 Pages Posted: 26 Mar 2020 Last revised: 9 Apr 2025

See all articles by Thomas J. Chemmanur

Thomas J. Chemmanur

Boston College - Carroll School of Management

Jie He

University of Georgia - Department of Finance

Xiao Ren

The Chinese University of Hong Kong, Shenzhen; Shenzhen Finance Institute

Tao Shu

The Chinese University of Hong Kong (CUHK) - CUHK Business School

Date Written: January 30, 2022

Abstract

The IPO volume in the U.S. significantly declines after 2000, with more entrepreneurial firms exiting through acquisitions rather than IPOs. Using proprietary U.S. Census data on private firms, we examine several new hypotheses to explain the above phenomena. Our results support explanations based on standalone public firms’ greater sensitivity to product market competition as well as private firms’ obtaining access to more abundant private equity financing in the post-2000 era. In contrast, we do not find evidence consistent with an eroded private firm base after 2000 or the economies of scope explanation that mainly focuses on firm size.

Keywords: Disappearing IPOs, Exit Choices, Competition Sensitivity, Private Equity, Eroded Private Firm Base

JEL Classification: G32, G34, G24

Suggested Citation

Chemmanur, Thomas J. and He, Jie and Ren, Xiao and Shu, Tao, The Disappearing IPO Puzzle and the Shift Toward Acquisitions: New Insights from Proprietary U.S. Census Data on Private Firms (January 30, 2022). Available at SSRN: https://ssrn.com/abstract=3556993 or http://dx.doi.org/10.2139/ssrn.3556993

Thomas J. Chemmanur

Boston College - Carroll School of Management ( email )

Finance Department, 436 Fulton Hall
Carroll School of Management, Boston College
Chestnut Hill, MA 02467-3808
United States
617-552-3980 (Phone)
617-552-0431 (Fax)

HOME PAGE: http://https://www2.bc.edu/thomas-chemmanur/

Jie He (Contact Author)

University of Georgia - Department of Finance ( email )

B318 Amos Hall
Terry College of Business, University of Georgia
Athens, GA 30602-6253
United States

Xiao Ren

The Chinese University of Hong Kong, Shenzhen ( email )

Shenzhen Finance Institute ( email )

Tao Shu

The Chinese University of Hong Kong (CUHK) - CUHK Business School ( email )

Cheng Yu Tung Building
12 Chak Cheung Street
Shatin, N.T.
Hong Kong

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