Initial Public Offerings and the Acquisition of Newly-Public Firms
Ragozzino, R., and Reuer, J. Initial Public Offerings and the Acquisition of Entrepreneurial Firms. 2007. Strategic Organization, Vol. 5: 155-176
38 Pages Posted: 12 Apr 2007 Last revised: 8 Apr 2014
Information asymmetries between buyers and sellers can create inefficiencies in M&A markets and prevent acquirers from gaining access to valuable resources and capabilities via acquisitions. Entrepreneurial firms face similar problems in raising external capital, due to the asymmetric information that separates them from prospective investors. In this paper, we bring together the strategy, financial economics, and entrepreneurship literatures and exploit the IPO context to examine the informational characteristics of newly-public entrepreneurial firms. We construct hazard models that offer strong evidence that certain IPO characteristics signal the value of entrepreneurial firms and thereby attract M&A suitors.
Keywords: Entrepreneurship, acquisition, IPO, M&A
JEL Classification: G3, M13
Suggested Citation: Suggested Citation