This paper studies the first day return of 227 carve-outs during 1996-2013. I find that the first day return of newly issued subsidiary stocks is explained by the reporting distortions in the pre IPO period, conditioned on whether the executives and directors of the subsidiary received stock...

The number of initial public offerings (IPOs) in the U.S. has been much lower since 2000 than in the prior two decades, although there was a surge in IPO activity in 2021. The Securities and Exchange Commission (SEC) has attempted to reduce the regulatory and cost burdens of going public....

I analyze the long-run performance and earnings management behavior of equity carve-outs conditioned on whether the executives received incentive stock options at the IPO date. Carve-outs that did not grant incentive stock options subsequently underperform both relative to the overall market and...

This paper examines timing of reverse mergers (takeovers) and behaviour of managers of firms that go public in reverse mergers. Results suggest that small private firms go public through mergers with financially distressed firms when market conditions are unfavourable, whereas reverse takeovers...

We examine how the ownership of lead venture capital firms (VCs) evolves after their portfolio companies (PCs) are publicly listed. The VC investment period before the IPO, the VC age, the PC age, and the percentage change in the post-IPO stock price all incentivize earlier VC exit. Lead VCs...

Over the past two decades, private equity has contributed to a shrinking of the U.S. stock market. We develop a political economy model of private equity activity to study the wider economic consequences of this trend. We show that private and social incentives to delist firms from the stock...

We analyze the dynamics of private firms' exit choice between IPOs and acquisitions and the valuation premium of IPOs over acquisitions from pre-2000 to post-2000. We first develop a two-period theoretical model, where in each period, entrepreneurs with private information about the viability of...

We investigate the effect of the “7% solution”—the fact that underwriters in the U.S. charge a 7% spread to most IPOs between $20 million and $100 million in size—on the ensuing pricing of the offerings. Our identification exploits the variation in spreads that is due to distinct kinks...

IPO firms with high-powered CEO incentive contracts have lower failure rates in the aftermarket. Economically, an interquartile change in the distribution of CEO pay translates in a reduction of the failure risk probability by approximately 21%. The Pay Gap between the CEO and its subordinate...

We study the impact of underwriter competition on corporate bond contracts. We develop a new measure of underwriter power and a novel empirical approach, based on the underwriter's comparative ability to place bonds. When an issuer has few "outside options" to take his bond to the market, the...