IFin Seminar, Luana Zaccaria - EIEF

Institute of Finance

Date: 29 January 2024 / 12:25 - 13:40

Speaker: Luana Zaccaria - EIEF

Title: From Public to Internal Capital Markets: The Effects of Affiliated IPOs on Group Firms


Date: January 29, 2024

Time: 12:25 - 13:40

Room: A-22



Using detailed data on corporate ownership for private and public firms, we document the effects of group-affiliated IPOs on other (unlisted) firms in the group. We find evidence of significant and persistent decrease in leverage (-6%) and increase in employment (+18%), with the latter effect being more pronounced for the more financially constrained, younger, and smaller firms within the group. By comparing the determinants and the ex-post effects of IPOs on affiliated and stand-alone issuers, we show that affiliated IPOs are less likely to be driven by the investment needs of the issuer. Altogether, this evidence is consistent with the hypothesis that relaxing financial constraints and expanding the workforce in group firms are intended objectives of affiliated IPOs rather than “side effects”.