To Be or Not to Be (Public)

58 Pages Posted: 4 Aug 2006

See all articles by Sreedhar T. Bharath

Sreedhar T. Bharath

Arizona State University (ASU) - Finance Department

Amy K. Dittmar

University of Michigan at Ann Arbor - The Stephen M. Ross School of Business

Date Written: December 2006

Abstract

Why do firms go public? Despite the existence of many theories addressing this question, lack of data on private firms before they are public hampers our ability to test these theories. We circumvent this challenge by testing reverse predictions of going public theories using firms' decisions to go private. We employ a comprehensive sample of going private transactions from 1980-2004 in the U.S. and examine how these firms differ at the initial public offering and over their public life relative to a sample of firms that went and remained public. We find that many of the factors that drive the firms to go private are evident at the initial public offering. Our results provide strong support for the importance of information and liquidity considerations in being a public firm.

Keywords: Going Public, Going Private

JEL Classification: G10, G30, G32, G34, G31

Suggested Citation

Bharath, Sreedhar T. and Dittmar, Amy, To Be or Not to Be (Public) (December 2006). University of Michigan Ross School of Business Research Paper, EFA 2007 Ljubljana Meetings Paper, AFA 2008 New Orleans Meetings Paper, Available at SSRN: https://ssrn.com/abstract=951710 or http://dx.doi.org/10.2139/ssrn.951710

Sreedhar T. Bharath (Contact Author)

Arizona State University (ASU) - Finance Department ( email )

W. P. Carey School of Business
PO Box 873906
Tempe, AZ 85287-3906
United States

Amy Dittmar

University of Michigan at Ann Arbor - The Stephen M. Ross School of Business ( email )

701 Tappan Street
Ann Arbor, MI MI 48109
United States
734-764-3108 (Phone)

HOME PAGE: http://webuser.bus.umich.edu/adittmar/

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