Why Do Firms Go Public? Evidence from the Banking Industry
The lack of data on private firms has made it difficult to empirically examine
theories of why firms go public. However, both public and private banks must disclose
financial information to regulators. We exploit this requirement to explore the goingpublic
decision. Our results indicate that banks that convert to public ownership are more
likely to become targets than control banks that remain private. Banks that go public are
also more likely to become acquirers than control banks. IPO banks grow faster than
control banks after going public, although there is some evidence that their performance
deteriorates.
