1. To IPO or Not To IPO: Risks, Uncertainty and the Decision to Go Public
- Author
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Latham, Scott and Braun, Michael R.
- Subjects
Capital market ,Going public (Securities) ,Company securities ,Company public offering ,Business ,Business, general - Abstract
To authenticate to the full-text of this article, please visit this link: http://dx.doi.org/10.1111/j.1467-8551.2010.00707.x Byline: Scott Latham (2), Michael R. Braun (1) Abstract: We employ three views of agency theory in unison to investigate managerial risk-taking in uncertain markets. Using 124 firms that filed to go public toward the end of the technology boom (2000-2002), we explore the influence of CEO ownership on the decision to continue or withdraw an initial public offering (IPO) in deteriorating public equity markets. We find an inverse U-shaped relationship between CEOs' equity participation and the decision to proceed with a public offering: the probability of IPO cancellation in weak capital markets increases as CEOs hold too little or too much ownership. Our results also indicate that a firm's debt levels are positively linked with the IPO decision. CEO ownership and leverage intensity interact to influence the decision to take a firm public. Author Affiliation: (2)University of Massachusetts - Lowell, College of Management, 1 University Avenue, Lowell, MA 01854, USAEmail:scott_latham@uml.edu (1)University of Montana - Missoula, School of Business Administration, Gallagher Business Building, 32 Campus Drive, Missoula, MT 59812, USAEmail:michael.braun@business.umt.edu more...
- Published
- 2010