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The Impact of Initial Public Offerings on Firms’ Performance: Disentangling Treatment from Self-Selection Effects

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  • Dario Salerno

Abstract

Using a unique sample of privately held and firms that went public on the European and Asian Stock Exchanges between 2007 and 2011, we investigate the IPO’s impact on the firms’ performance after correcting for endogenous selection and by disentangling equity issues effects from other effects. We find that companies that are going public are more profitable than their matched private firms, while they experience a decrease in profitability over the post-IPO period. These results are resilient to different empirical strategies that address selection bias. Second, after disentangling equity issues effects from other effects, we observe a continuous decline in firms’ profitability in each individual year following the IPO year. JEL classification numbers: G10, G30, G32, L25.

Suggested Citation

  • Dario Salerno, 2021. "The Impact of Initial Public Offerings on Firms’ Performance: Disentangling Treatment from Self-Selection Effects," Journal of Applied Finance & Banking, SCIENPRESS Ltd, vol. 11(4), pages 1-1.
    • Handle: RePEc:spt:apfiba:v:11:y:2021:i:4:f:11_4_1
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    More about this item

    Keywords

    IPOs; Private firms; Profitability; Selection bias.;
    All these keywords.

    JEL classification:

    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance

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