Using a unique sample of privately held and firms that went public
on the European and Asian Stock Exchanges between 2007 and 2011, we investigate
the IPOís impact on the firmsí performance after correcting for endogenous
selection and by disentangling equity issues effects from other effects. We
find that companies that are going public are more profitable than their
matched private firms, while they experience a decrease in profitability over
the post-IPO period. These results are resilient to different empirical
strategies that address selection bias. Second, after disentangling equity issues
effects from other effects, we observe a continuous decline in firmsí
profitability in each individual year following the IPO year.
JEL classification numbers: G10, G30, G32, L25.
Keywords: IPOs, Private
firms, Profitability, Selection bias.