Keywords
firm transparency, IPO flotation costs, asymmetric information hypothesis
Abstract
We demonstrate that firms that are more transparent pay less, in all components of issuance costs, to go public.We employ a sample of 334 previous leveraged buyouts and a characteristic-matched control sample to test the hypothesis that greater firm transparency before the issue decreases the flotation costs of the initial public offering. These flotation costs are divided into initial underpricing, underwriter discount, administrative expenses, and the overallotment option required to take the firm public. Our results provide further evidence of the asymmetric information hypothesis as it applies to initial public offerings.
Original Publication Citation
Firm Transparency and the Costs of Going Public, with James Ang, Journal of Financial Research, Vol. 25, No. 1 (Spring), 2002, 1-18.
BYU ScholarsArchive Citation
Ang, James S. and Brau, James C., "Firm Transparency and the Costs of Going Public" (2002). Faculty Publications. 9158.
https://scholarsarchive.byu.edu/facpub/9158
Document Type
Peer-Reviewed Article
Publication Date
2002
Publisher
Journal of Financial Research
Language
English
College
Marriott School of Business
Department
Finance
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