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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The decline in stock exchange listed firms
TL;DR: The number of exchange-listed firms has declined dramatically in the U.S. as mentioned in this paper , suggesting that increases in payroll costs decrease the firm's output and consequently, the need for capital.
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Should an Entrepreneur Exit via an IPO or Sell? – The Influence of Network Effects
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The Impact of Lost Underwriting Relationships on Venture Capital Firms' Investment Returns
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Going public: evidence from stock and bond IPOs in Belgium, 1839–1935
TL;DR: In this article , the authors investigate firms' initial stock and bond issues in public capital markets and explain fluctuations in these IPOs over time, and they find that economic growth induces IPOs and that the issuers time offerings such that they coincide with favorable market conditions.
References
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Do Brokerage Analysts' Recommendations Have Investment Value?
TL;DR: In this article, an analysis of new buy and sell recommendations of stocks by security analysts at major U.S. brokerage firms shows significant, systematic discrepancies between pre-recommendation prices and eventual values.
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Venture capitalists and the decision to go public
TL;DR: This article examined the timing of initial public offerings and private financings by venture capitalists and found that seasoned VCs are particularly proficient at taking companies public near market peaks, and that these companies go public when equity valuations are high and employ private finance when values are lower.