ipo valuation paper

Submitted By l3ounv
Words: 571
Pages: 3

Why Do Companies Go Public? - An Empirical Analysis

1) All the theories covered in the literature review;
I do not think that there were any theories covered in this paper. The paper does look at some of the similar studies done in other countries and often refers to these studies and uses some of their findings in order to have something to compare to the findings that the authors made.
2) The theory(s) this paper examines
Most of what the paper examines is how do the companies make the decision to go public and what are the financial implications of that decision.
3) Data and Methods of this study
The authors compare the ex ante and ex post characteristics of the IPO to the ex ante and ex post characteristics of a large sample of privately held companies.
4) Evidence and conclusions provided by the authors
The authors had a few things to report as findings. Companies who go public in Italy where the study was done are usually 40 years old or older. They say that this is due to Italians wanting a company to go public when it has acquired a great reputation. This is in stark contrast to what happens in the United States where very young companies go public early on to finance their expansion. The Italian companies don’t usually go public to finance growth, they usually use the proceeds from their IPO to pay down some debt. There is also something about tax evasion which makes Italian companies not want to go public because it will make them open their books to the tax authorities. I failed to understand how that could happen in a developed country but I understood that it is one of the reasons why companies do not want to go public.
5) Are you convinced by the author(s)’ arguments and conclusions.
I find some of the conclusions to be fascinating. I always that that companies would only go public so they can finance their expansion and was shocked to find out that in other countries, companies do it for different reasons. I think the author is very convincing in his findings and the way he explains those findings.
6) Are there any limits and errors (logically or