TY  - JOUR
AU  - Pagano,Marco
AU  - Panetta,Fabio
AU  - Zingales,Luigi
TI  - Why Do Companies Go Public? An Empirical Analysis
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 5367
PY  - 1995
Y2  - November 1995
UR  - http://www.nber.org/papers/w5367
L1  - http://www.nber.org/papers/w5367.pdf
N1  - Author contact info:
Marco Pagano
Department of Economics
University of Naples Federico II
Via Cintia, Monte S. Angelo
80126 Napoli,  ITALY
Tel: +390815752508
Fax: +390815752243
E-Mail: mrpagano@tin.it

Fabio Panetta
Bank of Italy
Research Dept.
Via Nazionale 91
00184 Roma ITALY
E-Mail: panetta.fabio@insedia.interbusiness.it

Luigi Zingales
Booth School of Business
The University of Chicago
5807 S. Woodlawn Avenue
Chicago, IL 60637
Tel: 773/702-3196
Fax: 773/834-2081
E-Mail: luigi.zingales@ChicagoBooth.edu
AB  - This paper empirically analyzes the determinants of an initial public offering (IPO) and the consequences of this decision on a company's investment and financial policy.  We compare both the ex ante and the ex post characteristics of IPOs with those of a large sample of privately held companies of similar size.  We find that (i) the likelihood of an IPO is positively related to the market-to-book ratio prevailing in the relevant industrial sector and to a company's size, (ii) IPOs are followed by an abnormal reduction in profitability, (iii) the new equity capital raised upon listing is not used to finance subsequent investment and growth, but to reduce leverage, (iv) going public reduces the cost of bank credit; (v) it is often associated by equity sales by controlling shareholders, and is followed by a higher turnover of control than for other companies.
ER  -