Dynamic Competition, Innovation and Strategic Financing

IPOs, growth, and the impact of relaxing listing requirements

“…In contrast, the growth of a firm's size increases in both the pre-and post-IPO periods. These results are consistent with the previous literature that focuses on the growth around IPOs (Clementi, 2002;Spiegel and Tookes, 2008).…”

“…Regarding productivity and profitability, we find that firms listed in the post-deregulation period report higher growth before going public than those in the pre-deregulation period. However, the higher growth rate in terms of profitability and productivity diminishes after a firm goes public, which is consistent with the theoretical arguments by Clementi (2002) and Spiegel and Tookes (2008) as well as the recent empirical results of Bernstein (2015) and Asker et al (2014), who argue that going public harms the strength of an IPO firm. In contrast, regarding size measurements, we find that firms in the post-deregulation period grow more both before and after IPOs than in the pre-deregulation period.…”

Do Anti-Takeover Provisions Spur Corporate Innovation?

“…In a similar setting with asymmetric information, Chemmanur 1 See also the theoretical model of Ferreira, Manso, and Silva (2012), who argue that insiders of private firms (which are less transparent to outside investors compared to public firms) are more tolerant of failures and thus more inclined to choose innovative projects, unlike the insiders of public firms, who choose more conventional (safer) projects that allow them to cash in early following the arrival of good news. Another important theoretical paper that deals with the relationship between the private versus public status of a firm and its innovative productivity is Spiegel and Tookes (2008), which predicts that firms will implement their most productive innovations when they are private firms and will go to the public markets only when more modest innovations remain.…”

The going public decision and the structure of equity markets

“…These results are also related to Spiegel and Tookes (2007)'s innovation argument if one accepts that lower tangibility is a proxy for high innovation since fixed assets are less important to generate innovation relative to intangible ones.…”

“…Among others, these may be related to asymmetric information and evaluation costs (Chemmanur and Fulghieri, 1999), competition and the revelation of confidential information (Bhattacharya and Ritter, 1983;Maksimovic and Pitchler, 2001), competition and innovation (Spiegel and Tookes, 2007), and productivity and fixed costs (Clementi, 2002). We look at some of these other determinants as alternative explanations for our results.…”