The Geography of Initial Public Offerings

53 Pages Posted: 28 Apr 2023 Last revised: 14 Nov 2023

See all articles by Shahram Amini

Shahram Amini

University of Denver

Andrew MacKinlay

Virginia Tech

Johan Sulaeman

National University of Singapore (NUS) - Sustainable & Green Finance Institute (SGFIN); European Corporate Governance Institute (ECGI); Asian Bureau of Finance and Economic Research (ABFER)

Chishen Wei

Hong Kong Polytechnic University - School of Accounting and Finance

Date Written: November 12, 2023

Abstract

We show that the decision to go public is influenced by the geographic variation in the supply of equity financing. We measure the amount of capital of equity investors in each U.S. region and document that the incidence of initial public offerings (IPOs) by resident firms facing collateral constraints increases significantly when regional equity capital is abundant. Using a novel empirical strategy and hand-collected data on out-of-state pension flows, we confirm that our findings are not due to underlying regional factors. Overall, our evidence is consistent with Holmstrom and Tirole's (1997) prediction that monitoring capital unlocks financing opportunities for collateral-constrained firms.

Keywords: IPOs, Agglomeration, Equity capital, Venture capital

JEL Classification: G20, G23, G14

Suggested Citation

Amini, Shahram and MacKinlay, Andrew and Sulaeman, Johan and Wei, Chishen, The Geography of Initial Public Offerings (November 12, 2023). Available at SSRN: https://ssrn.com/abstract=4429747 or http://dx.doi.org/10.2139/ssrn.4429747

Shahram Amini (Contact Author)

University of Denver ( email )

2101 S. University Blvd
Denver, CO 80208
United States

HOME PAGE: http://https://daniels.du.edu/directory/shahram-amini/

Andrew MacKinlay

Virginia Tech ( email )

1016 Pamplin Hall (0221)
880 West Campus Drive
Blacksburg, VA 24060-0221
United States

Johan Sulaeman

National University of Singapore (NUS) - Sustainable & Green Finance Institute (SGFIN) ( email )

Singapore

HOME PAGE: http://sites.google.com/site/johansulaeman/

European Corporate Governance Institute (ECGI) ( email )

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

HOME PAGE: http://https://ecgi.global/users/johan-sulaeman

Asian Bureau of Finance and Economic Research (ABFER) ( email )

BIZ 2 Storey 4, 04-05
1 Business Link
Singapore, 117592
Singapore

Chishen Wei

Hong Kong Polytechnic University - School of Accounting and Finance ( email )

Hung Hom
Kowloon
Hong Kong

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