Ownership Structure and the Life-Cycle of the Firm: A Theory of the Decision to Go Public

@inproceedings{Maug2001OwnershipSA,
  title={Ownership Structure and the Life-Cycle of the Firm: A Theory of the Decision to Go Public},
  author={Ernst Maug},
  year={2001}
}
This paper presents a theory of initial public offerings based on the idea that the optimal ownership structure of a company changes over the life cycle of the firm. Insiders take the company public when they have lost the comparative advantage over outsiders in gathering information to evaluate the firm's growth prospects. The size of the share sold to the public depends on the relative abilities of the market and insiders to gather this information and on the frictions in the going-public… CONTINUE READING

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