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Article
Publication date: 5 March 2018

María de las Mercedes Adamúz and José Luis Rivas

The purpose of this paper is to examine the factors that affect the likelihood of being public using a comprehensive database of private and public companies in Mexico…

Abstract

Purpose

The purpose of this paper is to examine the factors that affect the likelihood of being public using a comprehensive database of private and public companies in Mexico, from all sectors, during 2006-2014.

Design/methodology/approach

The authors estimate a longitudinal probit model to identify the ex ante characteristics of public Mexican firms that differentiate them from those Mexican firms that continue to remain private.

Findings

The authors find that larger, younger and less levered Mexican firms are more likely to be public in Mexico. They additionally test the influence of market conditions and location on the probability of being public. They find that location matters but they find no evidence that initial public offerings (IPOs) are driven by favorable Mexican market conditions.

Originality/value

This paper contributes to the Mexican and international literature on IPOs because it uses an original database built from information of private and public Mexican firms. The study contributes to a better understanding of the determinants of the decision of going public in Mexico.

Propósito

En este artículo se examinan los factores que afectan la probabilidad de que una empresa salga a Bolsa, utilizando una base de datos integral de empresas privadas y públicas en México, de todos los sectores, durante 2006-2014.

Diseño/Metodología/enfoque

Se estima un modelo probit longitudinal para identificar las características ex-ante de las empresas mexicanas listadas en bolsa que las diferencian de aquellas que siguen siendo privadas.

Resultados

Los autores encuentran que las empresas mexicanas más grandes, jóvenes y menos apalancadas tienen más probabilidades de estar listadas en la bolsa mexicana. Además, prueban si hay influencia de las condiciones del mercado y la ubicación en la probabilidad de listarse. Ellos encuentran que la ubicación de las empresas importa, pero no encuentran evidencia de que las OPIs sean impulsadas por condiciones favorables del mercado mexicano.

Originalidad/valor

Este trabajo de investigación contribuye a la literatura mexicana e internacional sobre OPIs, ya que utiliza una base de datos original construida a partir de información de empresas mexicanas privadas y públicas. El estudio contribuye a una mejor comprensión de los determinantes de la decisión de listar una empresa en bolsa en México.

Details

Academia Revista Latinoamericana de Administración, vol. 31 no. 1
Type: Research Article
ISSN: 1012-8255

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Article
Publication date: 4 February 2021

Dario Salerno

The purpose of this paper is to investigate which cross-country characteristics influence the going-public decisions and how the cultural values of the countries affect…

Abstract

Purpose

The purpose of this paper is to investigate which cross-country characteristics influence the going-public decisions and how the cultural values of the countries affect initial public offering (IPO) firms’ profitability and risk of financial distress.

Design/methodology/approach

Using a sample of privately held and firms that went public on the European and Asian Stock Exchanges between 2007 and 2011, this paper applies probit model and ordinary least squares regression to examine which cross-country characteristics could affect the decision to go public and how cultural values affect the profitability and risk of IPO firms.[AQ1] In addition, to overcome multicollinearity concerns caused by the use of Global Leadership and Organizational Behavioural Effectiveness culture dimensions, this paper factor analyses the dimensions using principal component analysis.

Findings

The results are as follows. First, this paper finds that firms in tradition-oriented countries are less likely to go public, while firms in result-oriented countries are more likely to hold an IPO. Second, this paper finds that country characteristics (i.e. financial deepening and taxation) affect the going-public decision. Third, this paper documents that IPO firms in traditionally and result-oriented countries have positive profitability and less risk of financial distress.

Practical implications

This study is intended for all those European and Asian policymakers and managers who want to improve their knowledge about what different indicators can establish the decision of firms that going-public facing different stages of their lifecycle. Specifically, policymakers wishing to promote IPO-activity in their countries may find it useful to strengthen the set of formal-institutions both to reduce corporate-taxation and to reduce the uncertainty associated with first-time share issuance and investment in such initiatives. This study is also intended for managers of companies that are not yet publicly-traded on their national stock-markets to be helpful to their decision-making processes.

Originality/value

This paper aims to extend the growing literature on the effects of cross-country factors on economic decision-making in finance and particularly adds to research that investigates the influence of these factors on the IPO decision of European and Asian firms.

Details

Journal of Asia Business Studies, vol. 15 no. 3
Type: Research Article
ISSN: 1558-7894

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Article
Publication date: 30 August 2019

Sung Gyun Mun and SooCheong (Shawn) Jang

This study aims to identify why restaurant firms go public (IPO) despite high financing costs and which factors make firms stay public for the long term after an IPO…

Abstract

Purpose

This study aims to identify why restaurant firms go public (IPO) despite high financing costs and which factors make firms stay public for the long term after an IPO. Also, this study aimed to link and compare restaurant firms’ pre- and post-IPO accounting information and how IPO proceeds were used.

Design/methodology/approach

This study used random-effects regression analysis with a number of dependent variables for a sample of 1,347 unbalanced panel data. In addition, logistic regression analyses were used to identify why restaurant firms were delisted within short periods after going public.

Findings

First, rebalancing financial structures was the most important reason for IPOs, whereas financing future growth was only a minor motivation. Second, post-IPO performance significantly differed between restaurant firms based on their pre-IPO financial conditions, as well as how they used IPO proceeds. Third, restaurant firms with low profitability, inefficient non-operating expenses and difficulties in generating revenue increased their financial burdens, which ultimately caused restaurant firms to be delisted within a short period after an IPO. Furthermore, the reasons for merging included cash shortages, large short-term liabilities and increased major operating expenses, together with increases in capital expenditures.

Originality/value

This study is unique, in that it explains the relationships between motivations for going public and post-IPO performances by directly linking the usages of IPO proceeds with firms’ operational performances. To the best of the authors’ knowledge, this study is the first to examine the effects of IPOs on restaurant firms’ operational, non-operational, investment and financial activities on firms’ performances.

Details

International Journal of Contemporary Hospitality Management, vol. 31 no. 9
Type: Research Article
ISSN: 0959-6119

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Article
Publication date: 1 March 1999

K.H. Spencer Pickett

Using the backdrop of an (apparently) extended visit to the West Indies, analogies with key concerns of internal audit are drawn. An unusual and refreshing way of…

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29263

Abstract

Using the backdrop of an (apparently) extended visit to the West Indies, analogies with key concerns of internal audit are drawn. An unusual and refreshing way of exploring the main themes ‐ a discussion between Bill and Jack on tour in the islands ‐ forms the debate. Explores the concepts of control, necessary procedures, fraud and corruption, supporting systems, creativity and chaos, and building a corporate control facility.

Details

Management Decision, vol. 37 no. 2
Type: Research Article
ISSN: 0025-1747

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Article
Publication date: 1 June 1998

K.H. Spencer Pickett

Using the backdrop of an (apparently) extended visit to the West Indies, analogies with key concerns of internal audit are drawn. An unusual and refreshing way of…

Downloads
24783

Abstract

Using the backdrop of an (apparently) extended visit to the West Indies, analogies with key concerns of internal audit are drawn. An unusual and refreshing way of exploring the main themes ‐ a discussion between Bill and Jack on tour in the islands ‐ forms the debate. Explores the concepts of control, necessary procedures, fraud and corruption, supporting systems, creativity and chaos, and building a corporate control facility.

Details

Managerial Auditing Journal, vol. 13 no. 4/5
Type: Research Article
ISSN: 0268-6902

Keywords

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Book part
Publication date: 1 January 2009

Ira W. Lieberman, Anne Anderson, Zach Grafe, Bruce Campbell and Daniel Kopf

Within the past few years, a new phenomenon has taken place among the world's leading microfinance institutions (MFIs) – entry into new capital markets through initial…

Abstract

Within the past few years, a new phenomenon has taken place among the world's leading microfinance institutions (MFIs) – entry into new capital markets through initial public offerings (IPOs). “Going public” launches MFIs into a new frontier, not only presenting challenges but also providing new opportunities for the institutions and the clients they serve.

Details

Moving Beyond Storytelling: Emerging Research in Microfinance
Type: Book
ISBN: 978-1-84950-682-3

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Abstract

This chapter explores the advantages (for large investors) of directly owning productive assets, compared with indirect ownership through stock in corporations. Significant factors are agency costs and recent changes in the tax and regulatory environment. Recent corporate scandals have led to legislative and regulatory responses that significantly increase the monitoring costs and other burdens of becoming or remaining a public corporation. As a result, there has been a substantial increase in going-private transactions, particularly among smaller public companies. Acquisitions and minority equity positions that allow large corporations to join with smaller companies have also increased. The pressures to go private are not entirely new, however. This chapter, reflecting collaboration by professors of finance and business law, traces the legal concept that the corporation is an entity separate and apart from its owners, showing how the legal status of corporations hinders resolution of conflicts among the parties to the enterprise. Thus, there have long been fundamental flaws inherent in the corporation as the form of organization for certain activities. The current wave of Sarbanes–Oxley restructuring via private equity firms is part of a significant increase in direct ownership of major assets by institutional investors. Direct ownership prevents management expropriation of resources, and is preferable to corporate ownership whenever other alternatives for indemnification or liability limitation are available (such as insurance, limited partnerships, limited liability companies, etc.). Finally, the renewal of direct ownership is not a radical shift, but a return to long-established tradition in the organization of business activities.

Details

Research in Finance
Type: Book
ISBN: 978-1-78190-759-7

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Article
Publication date: 3 July 2009

Arman Kosedag, Jamshid Mehran and Jinhu Qian

The purpose of this paper is to examine the informational asymmetry (informational advantage of managers) in leveraged buyout (LBO) transactions.

Abstract

Purpose

The purpose of this paper is to examine the informational asymmetry (informational advantage of managers) in leveraged buyout (LBO) transactions.

Design/methodology/approach

Unlike previous studies of informational asymmetry in LBOs, this research uses a set of reverse‐LBO and re‐LBO firms. The paper proposes and empirically tests three hypotheses that draw on the informational advantage of managers in LBOs. Specifically, the value gain (VG) realized by the reverse‐LBO firms is compared with that realized by a control sample of firms; the wealth distribution between managers and pre‐buyout shareholders is studied; and, finally, the performance of re‐LBO firms relative to reverse‐LBO firms is evaluated.

Findings

The results do not support the view that managers use buyouts to exploit their informational advantage. Specifically; the performance of LBO firms under the private ownership is comparable to those of matching public firms; the management team's return in a LBO deal is not significantly more than pre‐buyout shareholders’ return; and repeating reverse‐LBO firms (re‐LBOs) do not necessarily perform better than the non‐repeating reverse‐LBO firms.

Originality/value

While reverse‐LBOs have been investigated to some extent in the prior literature, studies on re‐LBOs are quite scant – although these transactions offer a new and interesting avenue to examine the motivations behind LBOs in general. The use of the entire LBO − reverse‐LBO − re‐LBO cycle in testing the informational advantage of managers is a novelty. It is hoped that re‐LBOs will attract the amount of attention they deserve as these firms may offer interesting means to reinvestigate commonly debated theories of corporate finance.

Details

Managerial Finance, vol. 35 no. 8
Type: Research Article
ISSN: 0307-4358

Keywords

Content available
Article
Publication date: 14 September 2010

Debbie Hepton

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916

Abstract

Details

Journal of Corporate Real Estate, vol. 12 no. 3
Type: Research Article
ISSN: 1463-001X

Content available
Article
Publication date: 1 March 2005

Joseph E. Levangie

Many entrepreneurs want to reach high to the heavens to achieve unlimited success. These hardworking, often underappreciated, venturers often crave fame and fortune as…

Abstract

Many entrepreneurs want to reach high to the heavens to achieve unlimited success. These hardworking, often underappreciated, venturers often crave fame and fortune as they strive to create their personal business legacy. One strategic path many have wandered down is that of the Initial Public Offering (IPO), whereby shares of the company are sold to the public. The IPO has many strong attractions. Large amounts of capital can be brought into the company.The company's stock can be used as currency to acquire other companies. Early investors realize a good ROI. Employees can perceive real value in their stock options. Customers, banks, vendors, and other stakeholders pay more respect to the company. Is this truly the entrepreneurʼs nirvana? Or is it a case of “Be careful of what you wish for because it may really come true?” Read on.

Details

New England Journal of Entrepreneurship, vol. 8 no. 2
Type: Research Article
ISSN: 2574-8904

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