IDEAS home Printed from https://ideas.repec.org/a/bla/jfnres/v25y2002i1p1-17.html
   My bibliography  Save this article

Firm Transparency and the Costs of Going Public

Author

Listed:
  • James S. Ang
  • James C. Brau

Abstract

We demonstrate that firms that are more transparent pay less, in all components of issuance costs, to go public. We employ a sample of 334 previous leveraged buyouts and a characteristic‐matched control sample to test the hypothesis that greater firm transparency before the issue decreases the flotation costs of the initial public offering. These flotation costs are divided into initial underpricing, underwriter discount, administrative expenses, and the overallotment option required to take the firm public. Our results provide further evidence of the asymmetric information hypothesis as it applies to initial public offerings.

Suggested Citation

  • James S. Ang & James C. Brau, 2002. "Firm Transparency and the Costs of Going Public," Journal of Financial Research, Southern Finance Association;Southwestern Finance Association, vol. 25(1), pages 1-17, March.
    • Handle: RePEc:bla:jfnres:v:25:y:2002:i:1:p:1-17
    DOI: 10.1111/1475-6803.00001
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/1475-6803.00001
    Download Restriction: no
    File URL: https://libkey.io/10.1111/1475-6803.00001?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Sherrill Shaffer & Tatyana Sokolyk, 2013. "Bank Loans to Newly Public Firms," Journal of Entrepreneurial Finance, Pepperdine University, Graziadio School of Business and Management, vol. 16(2), pages 33-56, Spring.
    2. Surendranath Jory & Jeff Madura, 2007. "Equity Offerings by Firms That Emerged from Bankruptcy," Journal of Entrepreneurial Finance, Pepperdine University, Graziadio School of Business and Management, vol. 12(2), pages 1-22, Fall.
    3. James C. Brau & Andrew Holmes, 2006. "Why Do REITs Repurchase Stock? Extricating the Effect of Managerial Signaling in Open Market Share Repurchase Announcements," Journal of Real Estate Research, American Real Estate Society, vol. 28(1), pages 1-24.
    4. Patrick Boisselier & Sameh Mekaoui, 2005. "Qualité De L'Information Financière Et Introduction Des Sociétés Sur Le Nouveau Marché : Enjeux Et Proposition D'Un Cadre D'Analyse," Post-Print halshs-00581131, HAL.
    5. Brau, James C. & Sutton, Ninon K. & Hatch, Nile W., 2010. "Dual-track versus single-track sell-outs: An empirical analysis of competing harvest strategies," Journal of Business Venturing, Elsevier, vol. 25(4), pages 389-402, July.
    6. Zhang, Cinder Xinde & King, Tao-Hsien Dolly, 2010. "The decision to list abroad: The case of ADRs and foreign IPOs by Chinese companies," Journal of Multinational Financial Management, Elsevier, vol. 20(1), pages 71-92, February.
    7. Rui Li & Wei Liu & Yong Liu & Sang-Bing Tsai, 2018. "IPO Underpricing After the 2008 Financial Crisis: A Study of the Chinese Stock Markets," Sustainability, MDPI, vol. 10(8), pages 1-13, August.
    8. Kenneth J. Hunsader & Gwendolyn Pennywell, 2011. "Earnings management and the stock market response to the Sarbanes‐Oxley Act based on a measure of competitive strategy," Review of Accounting and Finance, Emerald Group Publishing Limited, vol. 10(4), pages 368-384, November.
    9. James, Hui Liang & Ngo, Thanh & Wang, Hongxia, 2021. "Independent director tenure and corporate transparency," The North American Journal of Economics and Finance, Elsevier, vol. 57(C).
    10. Shen, Huayu & Xiong, Hao & Zheng, Shaofeng & Hou, Fei, 2021. "Chief executive officer (CEO)’s rural origin and internal control quality," Economic Modelling, Elsevier, vol. 95(C), pages 441-452.
    11. Cécile Carpentier & Jean-François L'Her & Jean-Marc Suret, 2005. "The Costs of Issuing Private Versus Public Equity," CIRANO Working Papers 2005s-14, CIRANO.
    12. James C. Brau & J. Troy Carpenter, 2012. "Efficacy of the 1992 Small Business Incentive Act," Journal of Financial Economic Policy, Emerald Group Publishing Limited, vol. 4(3), pages 204-217, July.
    13. Sharon Katz, 2008. "Earnings Quality and Ownership Structure: The Role of Private Equity Sponsors," NBER Working Papers 14085, National Bureau of Economic Research, Inc.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:jfnres:v:25:y:2002:i:1:p:1-17. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: https://edirc.repec.org/data/sfaaaea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.