Stock market development and the financing role of IPOs in acquisitions

Aktas, Nihat; Andries, Kathleen; Croci, Ettore; Ozdakak, Ali

doi:10.1016/j.jbankfin.2018.10.015

Cited by 21 publications

(8 citation statements)

References 41 publications

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“…In the current study, we are less concerned with IPO performance as an ultimate outcome and focus instead on the relation between the IPO event and the SME's post-IPO strategic choices. Prior corporate finance research shows that firms generally tend to increase their acquisition activities (Aktas et al, 2019;Brau et al, 2012) and R&D efforts (Kim & Weisbach, 2008), as well as adopt more aggressive marketing strategies following IPOs (Chod & Lyandres, 2011). These findings are consistent with those anticipated for the effects of financial resources on SME internationalization in that IPO facilitates growth in general by providing equity capital and access to additional financing sources.…”

Section: Research Hypothesessupporting

confidence: 76%

“…A DD specification requires observations before and after the treatment event. Prior studies of the effects of IPOs on strategic decisions typically examined a period of 3-5 years after the IPO (Aktas et al, 2019;Brau et al, 2012). Therefore, our analysis includes IPOs that took place between 1995 and 2009 to ensure that there are 5 years of data to observe before and after any IPO.…”

Section: Data and Samplementioning

confidence: 99%

“…IPOs serve as the point of entry to the public equity markets and give SMEs expanded access to capital, allowing them to develop and pursue new growth opportunities. In addition to accessing equity capital, IPOs can further reduce SMEs' financial limitations, for instance, by lowering borrowing costs vis-a `-vis private firms (Aktas, Andries, Croci, & Ozdakak, 2019). Accordingly, newly public firms have been found to accelerate corporate development through acquisitions (Brau, Couch, & Sutton, 2012), investment in R&D and capital expenditures (Kim & Weisbach, 2008), and aggressive product market strategies (Chod & Lyandres, 2011).…”

Section: Introductionmentioning

confidence: 99%

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The impact of initial public offerings on SMEs’ foreign investment decisions

et al. 2022

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This study aims to bridge the research on the internationalization of small- and medium-sized enterprises (SMEs) with the literature on initial public offerings (IPOs). It investigates how IPOs affect SMEs’ foreign investment decisions as they internationalize. We argue that IPOs enable SMEs to engage in a period of accelerated foreign expansion, resulting in a wave-like pattern, as suggested by Håkanson and Kappen’s (J Int Bus Stud 48(9):1103–1113, 2017) ‘Casino model’ of internationalization. We also propose that there will be a post-IPO shift in SMEs entering less familiar locations and towards taking higher ownership stakes in new subsidiaries. We use a difference-in-differences design combined with coarsened exact matching to isolate the effects of IPOs. Our analysis of overseas investments by a matched sample of newly listed Japanese manufacturing SMEs and their private counterparts provides strong evidence that SMEs accelerate the pace of establishing new foreign subsidiaries after going public. The results also reveal nuanced changes in the location and ownership patterns in the post-IPO period. This study identifies the IPO as a significant antecedent to SME foreign expansion and offers a new explanation for intertemporal variance in the pace, direction, and commitment of the SME internationalization process.

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Section: Research Hypothesessupporting

confidence: 76%

Section: Data and Samplementioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

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The impact of initial public offerings on SMEs’ foreign investment decisions

et al. 2022

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“…Germany, Japan) may have bank-driven markets (Demirgüç-Kunt, Feyen and Levine, 2012). Thus, following Aktas et al (2019), we introduce a proxy that allows us to account for bank development in our sample countries, calculated as the ratio between stock market capitalization and domestic credit to the private sector by banks (as a percentage of country GDP). Globally, the results remain unchanged and consistent with the main findings.…”

Section: Robustness Checks -Probability Of Firms Becoming Targetsmentioning

confidence: 99%

Does Target Country Cultural Orientation Influence M&A?

Ahmad

Aziz

Dowling

2021

British J of Management

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We examine whether the cultural orientation of target firms influences the outcomes of international mergers and acquisitions (M&As). Prior research shows that the national culture of the acquiring firm country influences M&As, as well as the distance between the acquiring and target country cultures. Not previously studied from a cultural perspective of M&As has been the target country culture, despite estimates that about 40% of M&As are target‐initiated. Our focus is on target firm cultural orientation, including how cultural orientation affects the likelihood of, and returns from, M&As. Our testing applies three cultural orientation factors (results, tradition and people orientation) extracted from a GLOBE cultural framework to a dataset of firm‐level M&A data across 39 countries, in 1990–2016. We find that firms from cultures with a results orientation are less likely to become M&A targets and also experience higher cumulative abnormal returns if acquired, while firms from countries with cultures with a tradition orientation or a people orientation are more likely to become targets but experience lower cumulative abnormal returns if acquired. These results are robust to a comprehensive range of robustness tests. Our findings suggest that understanding the cultural orientation of target firms is important to understanding M&A outcomes.

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“…The pioneering work of Schumpeter (1911), McKinnon (1973), and Shaw (1973) identified the causal relationships between financial sector development and economic growth. A large body of literature examined the causal and equilibrium relationships between stock market development as a subsector of financial sector and economic growth (see for example Aktas et al, 2019;Azam et al, 2016;Enisan & Olufisayo, 2009;Fufa & Kim, 2018;Nieuwerburgh et al, 2006;Pan & Mishra, 2019;Pradhan et al, 2015;Pradhan et al, 2014;Yang, 2018). Liquidity shaped by the stock markets makes investment less risky and provides long-term capital to companies.…”

Section: Introductionmentioning

confidence: 99%

Reviewing the Equilibrium and Causal Relationships between Stock Market Development and Economic Growth in Jordan

Malkawi¹

2019

IJEF

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The relationship between stock market development and economic growth has been diversely investigated by many researchers. This paper investigates the equilibrium and causal relationships between stock market development and economic growth in Jordan for the 1980-2018 period. It employs the ARDL approach and the results show evidence of a co-integration and causal relationships between variables. These results are broadly consistent with similar studies carried out for other developing economies.

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Stock market development and the financing role of IPOs in acquisitions

Cited by 21 publications

References 41 publications

The impact of initial public offerings on SMEs’ foreign investment decisions

The impact of initial public offerings on SMEs’ foreign investment decisions

Does Target Country Cultural Orientation Influence M&A?

Reviewing the Equilibrium and Causal Relationships between Stock Market Development and Economic Growth in Jordan

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