Banca d'Italia

About: Banca d'Italia is a other organization based out in Rome, Italy. It is known for research contribution in the topics: Monetary policy & Interest rate. The organization has 369 authors who have published 721 publications receiving 36026 citations.

Why Do Companies Go Public? An Empirical Analysis

Abstract: This paper empirically analyzes the determinants of an initial public offering (IPO) and the consequences of this decision on a company's investment and financial policy. We compare both the ex ante and the ex post characteristics of IPOs with those of a large sample of privately held companies of similar size. We find that (i) the likelihood of an IPO is positively related to the market-to-book ratio prevailing in the relevant industrial sector and to a company's size, (ii) IPOs are followed by an abnormal reduction in profitability, (iii) the new equity capital raised upon listing is not used to finance subsequent investment and growth, but to reduce leverage, (iv) going public reduces the cost of bank credit; (v) it is often associated by equity sales by controlling shareholders, and is followed by a higher turnover of control than for other companies.

Why Do Companies Go Public? An Empirical Analysis

Abstract: Using a large database of private firms in Italy, we analyze the determinants of initial public offerings (IPOs) by comparing the ex ante and ex post characteristics of IPOs with those of private firms. The likelihood of an IPO is increasing in the company’s size and the industry’s market-to-book ratio. Companies appear to go public not to finance future investments and growth, but to rebalance their accounts after high investment and growth. IPOs are also followed by lower cost of credit and increased turnover in control. THE DECISION TO GO PUBLIC is one of the most important and least studied questions in corporate finance. Most corporate finance textbooks limit themselves to describing the institutional aspects of this decision, providing only a few remarks on its motivation. The conventional wisdom is that going public is simply a stage in the growth of a company. Although there is some truth in it, this “theory” alone cannot explain the observed pattern of listings. Even in developed capital markets like the United States, some large companies—such as United Parcel Service or Bechtel—are not public. 1 In other countries, like Germany and Italy, publicly traded companies are the exceptions rather than the rule, and quite a few private companies are much

Some Contagion, Some Interdependence: More Pitfalls in Tests of Financial Contagion

Abstract: This paper builds on a standard factor model of stock market returns to reconsider recent empirical literature on contagion in financial markets based on bivariate correlation analysis. According to this literature, contagion is defined as a structural break in the linear transmission mechanism of financial shocks. Using our framework, we show that the result of 'no contagion, only interdependence' stressed by recent contributions is due to arbitrary and unrealistic restrictions on the variance of country-specific shocks. We focus on the international effects of the Hong Kong stock market crisis of October 1997 as a case study. For plausible values of the variance of country-specific shocks in Hong Kong, current tests cannot reject the null of interdependence for 16 countries out of a sample of 17. Our analysis strongly questions such conclusion, finding evidence of 'contagion' for at least five countries.

Bank Profitability and the Business Cycle

Abstract: An important element of the macro-prudential analysis is the study of the link between business cycle fluctuations and banking sector profitability and how this link is affected by institutional and structural characteristics. This work estimates a set of equations for net interest income, non-interest income, operating costs, provisions, and profit before taxes, for banks in the main industrialized countries and evaluates the effects on banking profitability of shocks to both macroeconomic and financial factors. Distinguishing mainly the euro area from Anglo-Saxon countries, the analysis also identifies differences in the resilience of the respective banking systems and relates them to the characteristics of their financial structure.