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
More filters
Journal ArticleDOI
Equity retention and social network theory in equity crowdfunding
TL;DR: In this article, the authors compare the regulation around the world and discuss how this impacts the development of markets and investigate the signaling role played toward external investors by equity retention and social capital.
ReportDOI
The Rise of Market Power and the Macroeconomic Implications
Jan De Loecker,Jan Eeckhout +1 more
TL;DR: This article studied the evolution of market power based on firm-level data for the U.S. economy since 1955 and measured both markups and profitability, and discussed the macroeconomic implications of an increase in average market power, which can account for a number of secular trends in the past four decades.
Journal ArticleDOI
Where has all the skewness gone? The decline in high-growth (young) firms in the U.S.
TL;DR: In this paper, the authors show that the shape of the firm employment growth distribution changes substantially in the post-2000 period and the overall decline reflects a sharp drop in the 90th percentile of the growth rate distribution accounted for by the declining share of young firms and the declining propensity for young firms to be high-growth firms.
Journal ArticleDOI
Using 10-K Text to Gauge Financial Constraints
TL;DR: The authors parse 10-K disclosures filed with the U.S. Securities and Exchange Commission (SEC) using a unique lexicon based on constraining words and find that the frequency of these words exhibits very low correlation with traditional measures of financial constraints and predicts subsequent liquidity events, such as dividend omissions or increases, equity recycling, and underfunded pensions.
Journal ArticleDOI
Local underwriter oligopolies and IPO underpricing
Xiaoding Liu,Jay R. Ritter +1 more
TL;DR: In this paper, the authors develop a theory of initial public offering (IPO) underpricing based on differentiated underwriting services and localized competition, and test their model implications on all-star analyst coverage, industry expertise, and other non-price dimensions.
References
More filters
Journal ArticleDOI
The Choice of IPO versus Takeover: Empirical Evidence*
TL;DR: In this article, the authors examine factors that influence the choice between an initial public offering (IPO) and a takeover by a public acquirer, and find that the industry concentration, high-tech industry affiliation, current cost of debt, relative "hotness" of the IPO market, firm size, and insider ownership percentage are all positively related to the probability of an IPO.
Journal ArticleDOI
Has New York become less competitive than London in global markets? Evaluating foreign listing choices over time
TL;DR: In this article, the authors investigated the effect of cross-listing on the performance of the New York and London stock exchanges from 1990 to 2005 and found that the benefits of cross listing on both the US and UK stock exchanges have changed over time, perhaps due to the passage of the Sarbanes-Oxley Act in 2002.
Journal ArticleDOI
The Effect of SOX Section 404: Costs, Earnings Quality, and Stock Prices
TL;DR: In this article, the authors exploit a natural quasi-experiment to isolate the effects that were uniquely due to the Sarbanes-Oxley Act (SOX): U.S. firms with a public float under $75 million could delay Section 404 compliance, and foreign firms under $700 millions could delay the auditor's attestation requirement.
Journal ArticleDOI
The Really Long-Run Performance of Initial Public Offerings: The Pre-Nasdaq Evidence
Paul A. Gompers,Josh Lerner +1 more
TL;DR: This article examined the performance of 3,661 U.S. IPOs from 1935 to 1972 and found that over the entire period, IPOs return as much as the market. But, the intercepts in CAPM and Fama-French regressions are insignificantly different from zero, suggesting no abnormal performance.
Journal ArticleDOI
Do Analysts Herd? An Analysis of Recommendations and Market Reactions
Narasimhan Jegadeesh,Woojin Kim +1 more
TL;DR: In this article, the authors investigate whether sell-side analysts herd around the consensus when they make stock recommendations and find that analysts from larger brokerages, analysts following stocks with smaller dispersion across recommendations, and analysts who make less frequent revisions are more likely to herd.