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Please use this identifier to cite or link to this item:
http://hdl.handle.net/2451/26731
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| Title: | THE CHOICE OF OUTSIDE EQUITY: AN EXPLORATORY ANALYSIS OF PRIVATELY HELD FIRMS |
| Authors: | Boehmer, Ekkehart
Ljungqvist, Alexander |
| Keywords: | Capital structure
capital constraints
private equity
going public decision |
| Issue Date: | 11-Apr-2001 |
| Series/Report no.: | S-CG-01-01 |
| Abstract: | We analyze the choice between public and private equity financing of a
unique, hand-collected sample of privately held firms that have
indicated their willingness to raise outside equity. We document that
these firms are remarkably similar at the time of the announcement, yet
71% complete an IPO, 18% sell equity privately, and the remaining firms
do not raise capital at all. To understand what determines the ultimate
outcome, we follow these firms over time and record what they might
learn up to their final decision. We identify the marginal conditions
that favor raising outside equity, and those that determine the choice
between public and private equity. Our results show that firms react
systematically to changes in market conditions, such as equity returns
and the cost of capital, that occur after the announcement, controlling
for capital constraints, ownership structure, and the motivation for
raising outside capital. |
| URI: | http://hdl.handle.net/2451/26731 |
| Appears in Collections: | Corporate Governance
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