Bustamante, Maria Cecilia (2012) The dynamics of going public. Review of Finance, 16 (2). pp. 577-618. ISSN 1572-3097
Full text not available from this repository.Abstract
This paper develops a real options model in which firms may use the timing of their initial public offerings (IPOs) to signal the quality of their investment prospects to outside investors. When adverse selection is more relevant (cold markets), firms with better investment prospects accelerate their IPO relative to their perfect information benchmark to reveal their type to outside investors. When adverse selection is less relevant (hot markets), all firms issue simultaneously, issuers are younger on average, and IPO timing is uninformative. An extension with multiple signals and the empirical evidence show that better ranked firms are younger, issue a lower fraction of shares, and underprice more during cold markets, and that issuers are younger on average during hot markets.
| Item Type: | Article |
|---|---|
| Official URL: | http://rof.oxfordjournals.org/ |
| Additional Information: | © 2011 The Author |
| Divisions: | Finance |
| Subjects: | H Social Sciences > HJ Public Finance |
| JEL classification: | D - Microeconomics > D8 - Information, Knowledge, and Uncertainty > D82 - Asymmetric and Private Information G - Financial Economics > G1 - General Financial Markets > G14 - Information and Market Efficiency; Event Studies G - Financial Economics > G3 - Corporate Finance and Governance > G31 - Capital Budgeting; Fixed Investment and Inventory Studies G - Financial Economics > G3 - Corporate Finance and Governance > G32 - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure |
| Date Deposited: | 13 Jul 2011 12:11 |
| Last Modified: | 12 Dec 2024 00:04 |
| URI: | http://eprints.lse.ac.uk/id/eprint/37379 |
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