Discussion

Overview

Class Preparation Materials:

• Required Readings:
  • Black, B. S., & Gilson, R. J. (1998). Venture capital and the structure of capital markets: Banks versus stock markets. Journal of Financial Economics, 47(3), 243-277.
  • Brau, J. C., & Fawcett, S. E. (2006). Initial public offerings: An analysis of theory and practice. The Journal of Finance, 61(1), 399-436.
  • Chok, J., & Qian, J. (2013). Comparable stocks, boundedly rational stock markets and IPO entry rates. PLoS ONE, 8(5), e61474.
  • Doidge, C., Karolyi, G. A., & Stulz, R. M. (2017). The U.S. listing gap. Journal of Financial Economics, 123(3), 464-487.
  • Ewens, M., & Farre-Mensa, J. (2020). The deregulation of the private equity markets and the decline in IPOs. The Review of Financial Studies, 33(12), 5463-5509.

Capital Markets, Exits, and Investor Returns (Part 1) Discussion – CLO 6

For this week’s discussion, answer the following questions in at least 100 words each:

1. What drives a private firm to go public? What happens to firms after they go public?
2. How has the deregulation of private equity markets affected the trend of IPOs? What is the relationship between the growth of private equity and the decline in public listings?
3. How do venture capital markets and the structure of capital markets (banks vs. stock markets) influence the development of innovative firms? What are the comparative advantages of bank-based versus stock market-based financial systems in supporting venture capital and innovation?
4. How do comparable stocks and boundedly rational stock markets influence IPO entry rates? What role does investor behavior and market sentiment play in the decision of firms to go public?
5. What are the key theoretical and practical considerations involved in initial public offerings? How do factors such as firm characteristics, market conditions, and underwriter selection affect the success of an IPO?
6. What are the factors contributing to the U.S. listing gap? What are the economic consequences of the decline in the number of publicly listed firms in the United States?