Going-Public and the Influence of Disclosure Environments
Article
- 202 Downloads
- 3 Citations
Abstract
This paper analyzes how differences in disclosure environments affect the firm’s choice between private and public capital. Disclosure requirements prescribe to what extent the firm has to release private information that may lead to the firm incurring proprietary costs. We examine which firm types go public in equilibrium, and how the equilibrium outcomes change with changes in the disclosure environments. Our findings show that in a partial financing equilibrium, should such an equilibrium exist, good firms finance privately. This result is robust to changes in the disclosure environment.
Keywords
going-public decision disclosure environments proprietary costPreview
Unable to display preview. Download preview PDF.
References
- Campbell, T. 1979‘‘Optimal Investment Financing Decisions and the Value of Confidentiality”Journal of Financial and Quantitative Analysis14913924Google Scholar
- Cho, I., Kreps, D. 1987‘‘Signalling Games and Stable Equilibria”Quarterly Journal of Economics102179221Google Scholar
- Gigler, F. 1994‘‘Self-enforcing Voluntary Disclosures”Journal of Accounting Research32224240Google Scholar
- Grossman, S. 1981‘‘The Informational Role of Warranties and Private Disclosure About Product Quality”Journal of Law and Economics24461483Google Scholar
- Grossman, S., Hart, O. 1980‘‘Takeover Bids, the Free Rider Problem, and the Theory of the Corporation”Bell Journal of Economics114269Google Scholar
- Grossman, S., Perry, M. 1986‘‘Perfect Sequential Equilibrium”Journal of Economic Theory3997119Google Scholar
- Huddart, S., Hughes, J., Brunnermeier, M. 1999‘‘Disclosure Requirements and Stock Exchange Listing Choice in an International Context”Journal of Accounting and Economics26237269Google Scholar
- Jensen, M., Meckling, W. 1976‘‘Theory of the Firm: Managerial Behavior, Agency Costs, and Ownership Structure”Journal of Financial Economics4305350Google Scholar
- Koeplin, J., Salin, A., Shapiro, A. 2000‘‘The Private Company Discount”Journal of Applied Corporate Finance1294101Google Scholar
- Kohlberg, E., Mertens, J. 1986‘‘On the Strategic Stability of Equilibria”Econometrica5410031037Google Scholar
- Kreps, D., Wilson, R. 1982‘‘Sequential Equilibria”Econometrica50863894Google Scholar
- Mailath, G., Okuno-Fujiwara, M., Postlewaite, A. 1993‘‘Belief-based Refinements in Signalling Games”Journal of Economic Theory60241276Google Scholar
- Maksimovic, V., Pichler, P. 1998‘‘Technological Innovation and Initial Public Offerings”Review of Financial Studies14459494Google Scholar
- Milgrom, P. 1981‘‘Good News and Bad News: Representation Theorems and Applications”Bell Journal of Economics12380391Google Scholar
- Moel, A. (1999). ‘‘The Role of Information Disclosure on Stock Market Listing Decisions: The Case of Foreign Firms Listing in the US”. Working paper, Harvard Business School.Google Scholar
- Pae, S. 1999‘‘Acquisition and Discretionary Disclosure of Private Information and its Implications for Firms’ Productive Activities”Journal of Accounting Research37465474Google Scholar
- Rajan, R. 1992‘‘Insiders and Outsiders: The Choice Between Informed and Arm’s-Length Debt”Journal of Finance4713671400Google Scholar
- Shleifer, A., Vishny, R. 1986‘‘Large Shareholders and Corporate Control”Journal of Political Economy94461488Google Scholar
- Verrecchia, R. 1990‘‘Information Quality and Discretionary Disclosure”Journal of Accounting and Economics12365380Google Scholar
- Wagenhofer, A. 1990‘‘Voluntary Disclosure with a Strategic Opponent”Journal of Accounting and Economics12341363Google Scholar
- Yosha, O. 1995‘‘Information Disclosure Costs and the Choice of Financing Source”Journal of Financial Intermediation4320Google Scholar
Copyright information
© Kluwer Academic Publishers 2004