City Research Online

The Going Public Decision of Business Group Firms

Urzúa, F. ORCID: 0000-0003-4681-7684, Sertsios, G. & Larrain, B. (2020). The Going Public Decision of Business Group Firms. Journal of Corporate Finance, 66, 101819. doi: 10.1016/j.jcorpfin.2020.101819

Abstract

IPOs affiliated to business groups represent a large fraction of new issues in global markets. Groups are characterized by stronger private benefits of control and an internal funding advantage. Consistent with these features, group firms are more selective when going public than standalone firms. In particular, group IPOs are larger and older firms and engage less in market timing than standalone IPOs. Group firms invest less and are more profitable post-IPO. Private benefits of control also affect the within-group selection of IPO firm. Our findings illustrate novel selection effects in public markets due to pre-IPO control structures.

Publication Type: Article
Additional Information: © 2020. This manuscript version is made available under the CC-BY-NC-ND 4.0 license http://creativecommons.org/licenses/by-nc-nd/4.0/
Subjects: H Social Sciences > HG Finance
Departments: Bayes Business School > Finance
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