The going public decision of business group firms

Borja Larrain, Giorgo Sertsios*, I. Francisco Urzúa

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

Abstract

IPOs affiliated to business groups represent a large fraction of new issues in global markets. Groups are characterized by stronger private benefits of control and an internal funding advantage. Consistent with these features, group firms are more selective when going public than standalone firms. In particular, group IPOs are larger and older firms and engage less in market timing than standalone IPOs. Group firms invest less and are more profitable post IPO. Private benefits of control also affect the within-group selection of IPO firm. Our findings illustrate novel selection effects in public markets due to pre-IPO control structures.

Original languageEnglish
Article number101819
JournalJournal of Corporate Finance
Volume66
DOIs
StatePublished - 1 Feb 2021

Bibliographical note

Publisher Copyright:
© 2020 Elsevier B.V.

Keywords

  • Business groups
  • IPOs
  • Private benefits

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