The Strategy of Going Public: How UK Firms Choose their Listing Contracts
Cardiff University - Cardiff Business School; European Corporate Governance Institute (ECGI)
University of Manchester - Manchester Business School, Division of Accounting Finance
Temple University - Department of Strategic Management
Journal of Business Finance & Accounting, Vol. 33, No. 1-2, pp. 79-101, January/March 2006
UK firms going public have a choice between public offers and placings. This choice has important implications in terms of who bears the risk of the issue failing and of its costs. We find that firms with higher ex ante uncertainty choose a placing contract. Highly reputable sponsors and creditor screening serve as signals of firm quality, enabling such firms to choose a public offer. Large and multinational firms usually choose a public offer whereas there is some evidence that very small issues choose a placing. Finally, the 'hotness' of the IPO market increases the probability of placings.
Number of Pages in PDF File: 23
Date posted: April 15, 2006