The Strategy of Going Public: How UK Firms Choose their Listing Contracts

23 Pages Posted: 15 Apr 2006  

Marc Goergen

Cardiff University - Cardiff Business School; European Corporate Governance Institute (ECGI)

Arif Khurshed

University of Manchester - Manchester Business School, Division of Accounting Finance

Ram Mudambi

Temple University - Department of Strategic Management

Abstract

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.

Suggested Citation

Goergen, Marc and Khurshed, Arif and Mudambi, Ram, The Strategy of Going Public: How UK Firms Choose their Listing Contracts. Journal of Business Finance & Accounting, Vol. 33, No. 1-2, pp. 79-101, January/March 2006. Available at SSRN: https://ssrn.com/abstract=886408 or http://dx.doi.org/10.1111/j.1468-5957.2006.00657.x

Marc Goergen (Contact Author)

Cardiff University - Cardiff Business School ( email )

Colum Drive
Cardiff, CF10 3EU
United Kingdom

HOME PAGE: http://www.cf.ac.uk/carbs/faculty/goergenm/index.html

European Corporate Governance Institute (ECGI) ( email )

c/o ECARES ULB CP 114
B-1050 Brussels
Belgium

HOME PAGE: http://www.ecgi.org

Arif Khurshed

University of Manchester - Manchester Business School, Division of Accounting Finance ( email )

Crawford House
Oxford Road
Manchester, M15 6PB
United Kingdom
+44 0 161 275 4475 (Phone)
+44 0 161 275 4023 (Fax)

Ram Mudambi

Temple University - Department of Strategic Management ( email )

Fox School of Business and Management
Philadelphia, PA 19122
United States
215-204-2099 (Phone)
215-204-8029 (Fax)

HOME PAGE: http://sbm.temple.edu/~rmudambi/index.html

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