Skip to main content
SpringerLink
Log in

Going Public to Grow? Evidence from a Panel of Italian Firms

  • Published:
Small Business Economics Aims and scope Submit manuscript

Abstract

This paper investigates the consequences of the decision to go public for the growth of Italian firms using US firms as a benchmark for comparison. We find Italian firms conducting IPOs are larger than US firms, but raise fewer funds from the IPO and grow more slowly afterwards. We also compare Italian IPOs across time. Firms going public in the 1990s display features that are more similar to US IPOs. We describe changes to the Italian economy and financial markets that are potentially responsible for the change. We compare firms of different size and with different governance structures, and we find that they behave differently after going public. Our results suggest that going public does not guarantee faster growth or more jobs. As such, public policies that simply increase access to equity markets may not be effective unless they provide incentives for the firms’ decision-makers to use the new capital to grow.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Log in via an institution

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Institutional subscriptions

Similar content being viewed by others

References

  • Anderson, R. W., 1994, ‘An Exploration of the Complementarity of Bank Lending and Securities Market. Mimeo, Université Catholic de Louvain

  • Barca, F., 1994, Imprese in cerca di padrone. Proprietà e controllo nel capitalismo italiano, Editori Laterza, Roma-Bari

  • Bebchuk, L., R. Kraakman and G. Triantis, 2000, Stock Pyramids, Cross-ownership, and Dual Class Equity: the Creation and Agency Costs of Separating Control from Cash Flow Rights, in R. Mork (ed.), Concentrated Ownership: University of Chicago Press.

  • Benfratello, L., D. Margon, L. Rondi, A. Sembenelli, D. Vannoni, S. Zelli and Zittino M., 2001, Il nuovo panel CERIS su dati d’Impresa 1977–1997. CERIS-CNR Working Papers No. 5, October, Torino, Italy

  • M. Bianchi M. Bianco L. Enriques (2001) Pyramidal Groups and the Separation between Ownership and Control in Italy F. Barca M. Becht (Eds) The Control of Corporate Europe Oxford University Press Oxford

    Google Scholar 

  • F. Brioschi L. Buzzacchi M. Colombo (1989) ArticleTitleRisk Capital Financing and the Separation of Ownership and Control in Business Groups Journal of Banking and Finance 13 747–772 Occurrence Handle10.1016/0378-4266(89)90040-X

    Article  Google Scholar 

  • M. Burkart F. Panunzi A. Shleifer (2003) ArticleTitleFamily Firms Journal of Finance 58 IssueID5 2167–2201 Occurrence Handle10.1111/1540-6261.00601

    Article  Google Scholar 

  • R. E. Carpenter B. C. Petersen (2002) ArticleTitleCapital Markets Imperfections, High-tech Investment, and New Equity Financing Economic Journal 112 54–72 Occurrence Handle10.1111/1468-0297.00683

    Article  Google Scholar 

  • R. E. Carpenter L. Rondi (2000) ArticleTitleItalian Corporate Governance, Finance, and Investment Empirica 27 IssueID4 365–388 Occurrence Handle10.1023/A:1010989312623

    Article  Google Scholar 

  • H. Chen J. R. Ritter (2000) ArticleTitleThe Seven Percent Solution Journal of Finance 55 IssueID3 1105–1131 Occurrence Handle10.1111/0022-1082.00242

    Article  Google Scholar 

  • U. Cherubini M. Ratti (1991) Quanto valgono le matricole? L’underpricing nelle prime quotazioni: teorie economiche e analisi empiriche A. Penati (Eds) Il Rischio Azionario e la Borsa EGEA Milano 249–288

    Google Scholar 

  • A. Dick L. Zingales (2004) ArticleTitlePrivate Benefits of Control: An International Comparison Journal of Finance 59 IssueID2 537–600 Occurrence Handle10.1111/j.1540-6261.2004.00642.x

    Article  Google Scholar 

  • T. J. Jenkinson (1990) ArticleTitleInitial Public Offerings in the United Kingdom, the United States, and Japan Journal of the Japanese and International Economies 4 428–449 Occurrence Handle10.1016/0889-1583(90)90020-7

    Article  Google Scholar 

  • S. Johnson R. La Porta F. Lopez-de-Silanes A. Shleifer (2000) ArticleTitleTunneling American Economic Review, Papers and Proceedings 2 IssueID90 22–27

    Google Scholar 

  • R. La Porta F. Lopez-de-Silanes A. Shleifer R. W. Vishny (1998) ArticleTitleLaw and Finance Journal of Political Economy 106 IssueID6 1113–1155 Occurrence Handle10.1086/250042

    Article  Google Scholar 

  • R. La Porta F. Lopez-de-Silanes A. Shleifer R. W. Vishny (2002) ArticleTitleInvestor Protection and Corporate Valuation Journal of Finance 57 IssueID3 1147–1170 Occurrence Handle10.1111/1540-6261.00457

    Article  Google Scholar 

  • T. Loughran J. R. Ritter K. Rydkvist (1994) ArticleTitleInitial Public Offerings: International Insights Pacific-Basin Finance Journal 2 165–199 Occurrence Handle10.1016/0927-538X(94)90016-7

    Article  Google Scholar 

  • F. Modigliani E. Perotti (2000) ArticleTitleSecurity Markets versus Bank Finance: Legal Enforcement and Investor Protection International Review of Finance, I 2 81–96 Occurrence Handle10.1111/1468-2443.00006

    Article  Google Scholar 

  • M. Pagano F. Panetta L. Zingales (1998) ArticleTitleWhy do Companies Go Public. An Empirical Analysis Journal of Finance 53 IssueID1 425–448 Occurrence Handle10.1111/0022-1082.25448

    Article  Google Scholar 

  • J. R. Ritter (1987) ArticleTitleThe Costs of Going Public Journal of Financial Economics 19 269–281 Occurrence Handle10.1016/0304-405X(87)90005-5

    Article  Google Scholar 

  • J. R. Ritter (1991) ArticleTitleThe Long-Run Performance of Initial Public Offerings Journal of Finance 46 3–27 Occurrence Handle10.2307/2328687

    Article  Google Scholar 

  • J. R. Ritter I. Welch (2002) ArticleTitleA Review of IPO Activity, Pricing, and Allocations Journal of Finance 57 IssueID4 1795–1828 Occurrence Handle10.1111/1540-6261.00478

    Article  Google Scholar 

  • A. Roell (1996) ArticleTitleThe Decision to Go Public: An Overview European Economic Review 40 1071–1081 Occurrence Handle10.1016/0014-2921(95)00114-X

    Article  Google Scholar 

  • S. A. Ross R. W. Westerfield J. F. Jaffe (1999) Corporate Finance Irwin Homewood, IL

    Google Scholar 

  • K. Rydkvist K. Hoegholm (1995) ArticleTitleGoing Public in the 1980s: Evidence from Sweden European Financial Management 1 287–315 Occurrence Handle10.1111/j.1468-036X.1995.tb00021.x

    Article  Google Scholar 

  • F. Schiantarelli A. Sembenelli (2000) ArticleTitleForm of Ownership and Financial Constraints: Panel Data Evidence from Flow of Finds and Investment Equations Empirica 27 IssueID2 175–192 Occurrence Handle10.1023/A:1026588619191

    Article  Google Scholar 

  • L. Zingales (1994) ArticleTitleThe Value of the Voting Right: A Study of the Milan Stock Exchange Experience Review of Financial Studies 7 IssueID1 125–148 Occurrence Handle10.1093/rfs/7.1.125

    Article  Google Scholar 

Download references

Author information

Authors and Affiliations

  1. UMBC and The Levy Economics Institute, Department of Economics, University of Maryland, Baltimore County Baltimore, MD, 21250, USA

    Robert E. Carpenter

  2. DISPEA, Politecnico di Torino and Ceris-CNR, Corso Duca degli Abruzzi, 24, Torino, 10129, Italy

    Laura Rondi

Authors
  1. Robert E. Carpenter
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. Laura Rondi
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Laura Rondi.

Rights and permissions

Reprints and permissions

About this article

Cite this article

Carpenter, R.E., Rondi, L. Going Public to Grow? Evidence from a Panel of Italian Firms. Small Bus Econ 27, 387–407 (2006). https://doi.org/10.1007/s11187-005-4323-3

Download citation

  • Accepted:

  • Issue Date:

  • DOI: https://doi.org/10.1007/s11187-005-4323-3

Keywords

Jel Classification

Search

Navigation