The Disappearing IPO Puzzle: New Insights from Proprietary U.S. Census Data on Private Firms
60 Pages Posted: 26 Mar 2020 Last revised: 31 Jan 2022
Date Written: January 30, 2022
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 a comprehensive set of hypotheses to explain the above phenomena. We find support for explanations based on standalone public firms’ greater sensitivity to product market competition and private firms’ access to more abundant private equity financing post-2000. We find mixed or no evidence for explanations based on a weaker US economy, smaller net financial benefits from being standalone public firms, or an increased need for confidentiality after 2000.
Keywords: Exit Choices, Disappearing IPOs, Private Equity, Weak Economy, Product Market Competition
JEL Classification: G32, G34, G24
Suggested Citation: Suggested Citation