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 JOBS Act and IPO volume: Evidence that disclosure costs affect the IPO decision
TL;DR: The Jumpstart Our Business Startups Act (JOBS Act) was introduced to help revitalize the initial public offering (IPO) market, especially for small firms as discussed by the authors.
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Is there a U.S. High Cash Holdings Puzzle after the Financial Crisis
TL;DR: This article found that the average abnormal cash holdings of U.S. firms after the financial crisis amount to 10% of their total stock holdings, which represents an 87% increase in abnormal stock holdings from before the crisis.
ReportDOI
The Evolution of Corporate Cash
John R. Graham,Mark T. Leary +1 more
TL;DR: Karolyi et al. as discussed by the authors studied time-series and cross-firm variation in corporate cash holdings from 1920 to 2014 and found that the recent divergence between average and aggregate cash is new and entirely driven by a shift in cash policies of newly public firms.
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The Deregulation of the Private Equity Markets and the Decline in Ipos
TL;DR: The deregulation of securities laws, in particular the National Securities Markets Improvement Act (NSMIA) of 1996, has increased the supply of private capital to late-stage private startups, which are now able to grow to a size that few private firms used to reach as discussed by the authors.
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What drives the valuation premium in IPOs versus acquisitions? An empirical analysis
Onur Bayar,Thomas J. Chemmanur +1 more
TL;DR: In this article, the authors developed the first empirical analysis in the literature of the "IPO valuation premium puzzle", which refers to a situation where many private firms choose to be acquired rather than to go public at higher valuations.
References
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