54 Pages Posted: 16 Feb 2005
Date Written: July 22, 2005
A number of firms in the United Kingdom first list without issuing equity and then issue equity shortly thereafter. We argue that this two-stage offering strategy is less costly than an IPO because trading reduces the valuation uncertainty of these firms before they issue equity. We find that initial return is 10% to 30% lower for these firms than for comparable IPOs, and we provide evidence that the market in the firm's shares lowers financing costs. We also show that these firms time the market both when they list and when they issue equity.
JEL Classification: G31
Suggested Citation: Suggested Citation
Derrien, François and Kecskes, Ambrus, The Initial Public Offerings of Listed Firms (July 22, 2005). AFA 2006 Boston Meetings, Forthcoming; EFA 2005 Moscow Meetings; Journal of Finance, Vol. 62, No. 1, p.447-479, 2007. Available at SSRN: https://ssrn.com/abstract=667604 or http://dx.doi.org/10.2139/ssrn.667604