Are Companies More Likely to Go Public If Their Competitors Do?

The determinants of when and why private companies decide to go public through an initial public offering (IPO) is an important question with many policy implications. Anecdotally, one reason why firms decide to do an IPO is as a response to the actions of their rivals. For example, in the share-economy sector, Uber is said to have sped up its IPO plans after learning that Lyft would soon go public. In the cyber-security industry, Tenable reportedly sped up its IPO plans after hearing about the IPO of one of its close competitors, Zscaler. These sorts of “peer effects” among firms—where … Read more

Does Mandatory Disclosure for Private Firms Increase Their Chances of Going Public?

How do disclosure requirements influence a private firm’s decision to go public? This is an important question for regulators and corporate finance professionals, given current debate about how much information private firms should have to disclose. Conceptually, public disclosure requirements for private firms can lead to greater exposure of the firm’s confidential and proprietary information. Keeping this information out of the hands of competitors is a major factor that pushes firms to stay private. However, the introduction of laws that compel firms to disclose their private information essentially strips away this advantage. As a result, one would expect the ability … Read more