TY  - JOUR
AU  - Kim,Woojin
AU  - Weisbach,Michael
TI  - Do Firms Go Public to Raise Capital?
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 11197
PY  - 2005
Y2  - March 2005
UR  - http://www.nber.org/papers/w11197
L1  - http://www.nber.org/papers/w11197.pdf
N1  - Author contact info:
Woojin Kim
SNU Business School
Seoul National University
1 Gwanak Ro
Gwanak-gu
Seoul, 151-916
Korea
Tel: +82-2-880-5831
E-Mail: woojinkim@snu.ac.kr

Michael Weisbach
Department of Finance
Fisher College of Business
Ohio State University
2100 Neil Ave.
Columbus, OH  43210
Tel: 614 292 3264
E-Mail: weisbach.2@osu.edu
AB  - This paper considers the question of whether raising capital is an important reason why firms go public. Using a sample of 16,958 initial public offerings from 38 countries between 1990 and 2003, we consider differences between firms that sell new, primary shares to the public, and existing secondary shares that previously belonged to insiders. Our results suggest that the sale of primary shares is correlated with a number of factors associated with the firm's demand for capital. In particular, issuance of primary shares is correlated with higher increases of investment, higher repayment of debt and increases in cash, and more subsequent capital-raising through seasoned equity offers. Since 79% of all capital raised through IPOs in our sample is from the sale of primary shares, we conclude that capital-raising is an important motive in the going-public decision.
ER  -