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Staged financing of newly public firms around the world

Author

Listed:
  • Azizjon Alimov

    (Univ. Lille, CNRS, UMR 9221 - LEM - Lille Economie Management)

  • Michael G. Hertzel

    (Arizona State University)

Abstract

We investigate the prevalence of capital staging (sequential infusion of capital) in the IPO markets in 47 countries between 1991 and 2019. Our evidence is consistent with the hypothesis that investors provide funds to IPOs in stages to mitigate costs associated with firm-specific uncertainty about future prospects and information asymmetry. Going public firms with more intangible assets and greater R&D intensity raise less money relative to financing needs at the time of the IPO and are more likely to return to capital markets for subsequent financing and do so more frequently. We also document that the evidence of staged financing is stronger in countries that provide better legal protection to investors.

Suggested Citation

  • Azizjon Alimov & Michael G. Hertzel, 2024. "Staged financing of newly public firms around the world," Small Business Economics, Springer, vol. 63(4), pages 1641-1663, December.
    • Handle: RePEc:kap:sbusec:v:63:y:2024:i:4:d:10.1007_s11187-024-00901-7
    DOI: 10.1007/s11187-024-00901-7
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    More about this item

    Keywords

    Initial public offerings; Staging of capital; Uncertainty; Information asymmetry; International investor protection;
    All these keywords.

    JEL classification:

    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • G35 - Financial Economics - - Corporate Finance and Governance - - - Payout Policy
    • F30 - International Economics - - International Finance - - - General

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