Where Have All the IPOs Gone
TLDR
In this article, the authors propose an alternative explanation for the decline in the number of initial public offerings in the United States: the advantages of selling out to a larger organization, which can speed a product to market and realize economies of scope, have increased relative to the benefits of operating as an independent firm.Abstract:
During 1980–2000, an average of 310 companies per year went public in the United States. Since 2000, the average has been only 99 initial public offerings (IPOs) per year, with the drop especially precipitous among small firms. Many have blamed the Sarbanes-Oxley Act of 2002 and the 2003 Global Settlement’s effects on analyst coverage for the decline in IPO activity. We find very little support for the conventional wisdom, and we offer an alternative explanation. Our economies of scope hypothesis posits that the advantages of selling out to a larger organization, which can speed a product to market and realize economies of scope, have increased relative to the benefits of operating as an independent firm.read more
Citations
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Are US Industries Becoming More Concentrated
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Financial Wealth, Socioemotional Wealth, and IPO Underpricing in Family Firms: A Two-stage Gamble Model
TL;DR: In this article, a behavioral agency model with the aversion to loss realization logic is proposed to explain how family owners' decision frames and preferences change during the IPO process, depending on initial losses of current socioemotional wealth and new expectations of future SEW.
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Does success bring success? The post-offering lives of equity-crowdfunded firms
Andrea Signori,Silvio Vismara +1 more
TL;DR: In this article, the authors study the population of 212 successfully funded initial equity offerings on the UK's largest crowdfunding platform Crowdcube from inception (2011) to 2015, and find that 18% of these firms failed, while 35% pursued one or more seasoned equity offerings in the form of either private equity injection (9%) or follow-on crowdfunding offering (25%).
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Europe’s Second Markets for Small Companies
TL;DR: In this article, the average long-run performance of initial public offerings (IPOs) on second markets is dramatically worse than for main market IPOs, and most of the IPOs on these exchange-regulated markets are offered exclusively to institutional investors, and are equivalent to private placements.
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Towards a Political Theory of the Firm
TL;DR: In economics, the commonly prevailing view of the firm ignores all these elements of politics and power as discussed by the authors, and we must recognize that large firms have considerable power to influence the rules of the...
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