City Research Online

Abstract

We study the effects of going public using a unique panel of firms in 16 European countries for which we observe financial data before and after initial public offering (IPO) attempts. We compare completed and withdrawn IPO attempts. We instrument the decision to complete the IPO using prior market returns. After instrumenting, we isolate a positive causal effect of going public on profitability. We also find a post-IPO expansion in sales per employee, subsidiaries, and countries in which firms operate. Overall, our results are consistent with going public relaxing financial constraints and inducing a shift in strategy towards increased commercialization.

Publication Type:	Article
Additional Information:	This is a pre-copyedited, author-produced version of an article accepted for publication in Review of Financial Studies following peer review. The version of record will be available online at: https://academic.oup.com/rfs
Publisher Keywords:	POs, Profitability, Commercialization, Selection versus Treatment
Subjects:	H Social Sciences > HB Economic Theory H Social Sciences > HG Finance
Departments:	Bayes Business School Bayes Business School > Finance
SWORD Depositor:	Symplectic Administrator

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