Staged Equity Financing

53 Pages Posted: 14 Jan 2021

See all articles by Magnus Blomkvist

Magnus Blomkvist

Audencia Business School

Timo Korkeamäki

Hanken School of Economics

Tuomas Takalo

Bank of Finland, Monetary Policy and Research Department; VATT Institute for Economic Research

Date Written: August 26, 2020

Abstract

We propose a rationale for why firms often return to the equity market shortly after their initial public offering (IPO). We argue that hard to value firms conduct smaller IPOs, and that they return to the equity market conditional on positive valuation signal from the stock market. Thus, information asymmetry is not a necessary condition for staged financing. We find strong support for these arguments in a sample of 2,143 U.S. IPOs between 1981-2014. Hard to value firms conduct smaller IPOs, and upon positive post-IPO returns, they tend to return to the equity market quickly, following the IPO.

JEL Classification: G14, G24, G32

Suggested Citation

Blomkvist, Magnus and Korkeamäki, Timo and Takalo, Tuomas, Staged Equity Financing (August 26, 2020). Bank of Finland Research Discussion Paper No. 15/2020, Available at SSRN: https://ssrn.com/abstract=3764720

Magnus Blomkvist (Contact Author)

Audencia Business School ( email )

8 Road Joneliere
BP 31222
Nantes Cedex 3, 44312
France

Timo Korkeamäki

Hanken School of Economics

Helsinki

Tuomas Takalo

Bank of Finland, Monetary Policy and Research Department ( email )

P.O. Box 160
Helsinki, FIN-00101
Finland

HOME PAGE: http://https://sites.google.com/site/tuomastakalo/

VATT Institute for Economic Research

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