Optimal IPO Timing: Based on Growth Changes of Cash Flow

  • Jun Wang
  • Kun Li
Conference paper
Part of the Lecture Notes in Electrical Engineering book series (LNEE, volume 241)


In this paper, we use model and analysis to study the IPO optimal timing based on a real option framework. We assume IPO will change the growth mode of cash flow and relax the original assumption in previous mode that the company’s growth rate of cash flow will maintain constant after IPO. Analysis showed that the greater the growth potential of the listing companies, the earlier they got listed; when listing costs is larger, the entrepreneurs will obviously delay IPO; The more optimistic of the company, the sooner the company go public; the more optimistic the corporate decision makers look upon the company, the later the IPO take place; the higher uncertainty of future earnings, the later company will be list. The concluding provided a good reference for the regulator of capital market who can makes effective safeguard for stability of the market and reasonable listing standards for listed companies, and for entrepreneurs to form the correct IPO concept as well as make reasonable IPO decision.


Optimal IPO timing Real option Cash flow increase 


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Copyright information

© Springer-Verlag Berlin Heidelberg 2014

Authors and Affiliations

  1. 1.Business SchoolSichuan UniversityChengduPeople’s Republic of China

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