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

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: 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). Review of Corporate Finance Studies, forthcoming, 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 )

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