Going Public Abroad

Caglio, Cecilia; Hanley, Kathleen Weiss; Marietta-Westberg, Jennifer

doi:10.2139/ssrn.1572949

Cited by 12 publications

(8 citation statements)

References 17 publications

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“…The count for Chinese IPOs does not include those from Hong Kong, and it excludes "reverse mergers" and best efforts IPOs. To summarize, the evidence in our Table 4 and Caglio et al (2012) and Doidge et al (2009), (2013) does not suggest that the lower number of IPOs in the United States in recent years is because issuers are fleeing U.S. markets in favor of foreign markets.…”

Section: Tablementioning

confidence: 62%

“…Our hypothesis that small firms are not going public in the United States because the advantage of being a small independent firm has fallen applies to other countries as well. Consistent with this hypothesis, Caglio et al ((2012), Table X) report that both Germany and France saw their domestic IPO volume drop by at least 50% in 2002-2007 relative to 1995-2001. Furthermore, the average IPO proceeds in Germany and France more than doubled, indicating a loss of small deals, similar to the U.S. pattern.…”

Section: B the Effect Of Sox On Foreign Listingsmentioning

confidence: 63%

“…Furthermore, relatively few U.S. firms have chosen to go public abroad (Caglio, Hanley, and Marietta-Westberg ((2012), Table III)), and foreign listings have not been disproportionately affected (Doidge, Karolyi, and Stulz ((2009), Table 7)). We report that in every year since 2004 the percentage of U.S. IPOs that are from foreign firms has been higher than in all but a handful of prior years.…”

Section: Introductionmentioning

confidence: 99%

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Where Have All the IPOs Gone?

Gao¹,

Ritter²,

Zhu³

2013

J. Financ. Quant. Anal.

435

222

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During 1980-2000, an average of 310 companies per year went public in the United States. Since 2000, the average has been only 99 initial public offerings (IPOs) per year, with the drop especially precipitous among small firms. Many have blamed the Sarbanes-Oxley Act of 2002 and the 2003 Global Settlement's effects on analyst coverage for the decline in IPO activity. We find very little support for the conventional wisdom, and we offer an alternative explanation. Our economies of scope hypothesis posits that the advantages of selling out to a larger organization, which can speed a product to market and realize economies of scope, have increased relative to the benefits of operating as an independent firm.

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Section: Tablementioning

confidence: 62%

Section: B the Effect Of Sox On Foreign Listingsmentioning

confidence: 63%

Section: Introductionmentioning

confidence: 99%

See 1 more Smart Citation

Where Have All the IPOs Gone?

Gao¹,

Ritter²,

Zhu³

2013

J. Financ. Quant. Anal.

435

222

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“…Jagannathan et al (2010)), and an increased ability to raise capital on more advantageous terms outside an IPO's home country (e.g. Kim & Weisbach (2008) and Caglio et al (2016)) may explain why U.S. firms choose to issue equity solely abroad. None of the aforementioned studies however investigate firm performance; therefore, this research contributes to fill such gap.…”

mentioning

confidence: 99%

The long-run performance of US firms pursuing IPOs in foreign markets

Killins

Egly

2018

RAF

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Purpose The purpose of this paper is to investigate the long-run performance of a unique set of US domiciled firms that have bypassed the US capital markets in pursuit of their initial public offering (IPO) overseas. Additionally, this paper then tests the popular underwriter prestige impact and the window of opportunity hypothesis on this unique subset of IPOs. Design/methodology/approach Using a sample of foreign and purely domestic IPOs made by US firms from 2000 to 2011, this study investigates the long-term performance, one-, two- and three-year by using two measures (buy-and-hold return and cumulative abnormal returns) to test the long-run returns of newly listed companies. Finally, the research incorporates both the traditional matching methodology (issue year and size) along with propensity score matching methodology. Findings FIPOs of US companies underperform DIPOs and their matched DIPOs; furthermore, FIPOs underperform the index of the two listing countries they use the most (UK and Canada). Although the choice of a reputable underwriter mitigates underperformance, the choice of listing in a foreign country only may be a result of possible high valuations accorded by foreign investors who buy US-listed companies on the domestic exchange possibly for reducing exchange rate risk and gaining US diversification without incurring additional costs. It is, thus, possible that US companies that undertake Foreign IPOs not only escape potentially higher Security and Exchange Commission regulations and disclosure but also benefit from higher valuations in the foreign markets. Originality/value To the best of the authors’ knowledge, this is the first study to investigate the long-term performance of US firms bypassing the US capital markets in pursuit of their initial equity offering elsewhere. Caglio et al. (2016) investigated why firms decide to pursue such equity raising activity but fail to investigate the firms’ actual performance after issuing equity. This research fills such a gap in the literature and is important for both academics and practitioners. Practitioners can use this information in assessing the quality of such investments in the long-run, and firms can use such information when determining the different options of issuing equity. Further, regulators should be aware of the implications that increased regulations have on capital raising activities in their domestic market.

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“…Investors in a country are best equipped to assess the operations of the company in that country because of better local knowledge, so price discovery and price signals might be improved by listing on the exchange in the country in which the firm operates (Foucault and Gehrig 2008). Indeed, Caglio et al (2016) show that firms that list abroad tend to mainly be firms oriented towards markets abroad and originate from countries with low financial development. Thus, there is some benefit of companies listing on a stock exchange that has investors from the country they plan to operate in.…”

Section: The Value Of a Local Stock Marketmentioning

confidence: 99%

Should we worry about the decline of the public corporation? A brief survey of the economics and external effects of the stock market

Koptyug

Persson

Tåg

2020

The North American Journal of Economics and Finance

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. ABSTRACTIn recent years, the number of listed companies has been declining in many countries across the world. This paper provides a selective survey of the literature on the real economic effects of the stock market to assess the potential effects of this decline and determine whether it is likely to continue. The leading economic role of the stock market's primary market, in which firms raise capital by issuing new shares, is to help growing firms secure financing. We discuss providing and certifying information, coordinating investors, and easing the redeployment of capital as the means through which capital allocation can be achieved efficiently. The main economic role of the stock market's secondary market, the trade in existing shares, is to provide liquidity to shareholders, to aid in price discovery, and to provide diversification opportunities. Positive external effects from an active stock market may arise on consumers, labour and private firm due to increased corporate investment, more social responsible business strategies and a more positive business climate. Negative external effects on capital allocation and productivity can arise from short-termism, market mispricing, and increased cross-ownership. Local stock markets can spur innovation and foreign direct investment (FDI) and reduce the risk of early cross-border acquisitions. Given the myriad of useful economic functions the stock market performs, a future entirely absent of public companies is difficult to imagine and the decline is therefore likely at some point to come to an end. Whether we need to worry about the decline depends on the relative importance of the positive and negative external effects, a topic we feel warrants more research.

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Going Public Abroad

Cited by 12 publications

References 17 publications

Where Have All the IPOs Gone?

Where Have All the IPOs Gone?

The long-run performance of US firms pursuing IPOs in foreign markets

Should we worry about the decline of the public corporation? A brief survey of the economics and external effects of the stock market

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