Posted: 23 Feb 2003
This paper complements the analysis of the decision to go public contained in Pagano et al. (1995). We compare a larger set of Italian initial public offerings, including holding companies, with size-matched private companies. Even in this larger sample we find evidence that: (i) the new equity capital raised upon listing is not used to finance subsequent investment and growth; (ii) going public reduces the cost of credit; (iii) it is often associated with equity sales by controlling shareholders, and is followed by a higher turnover of control than for other companies. A novel finding is that the funds raised are used to purchase stakes in other companies and other financial assets.
Keywords: Initial public offering, Going public, Stock market
Suggested Citation: Suggested Citation
Pagano, Marco and Panetta, Fabio and Zingales, Luigi, The Stock Market as a Source of Capital: Some Lessons from Initial Public Offerings in Italy. European Economic Review, Vol. 40, Issues 3-5, pp. 1057-1069, April 1996. Available at SSRN: https://ssrn.com/abstract=360581