Credit Crunch and Timing of Initial Public Offerings

We show evidence that firms with more outstanding short-term debt are more likely to go public in bear markets than firms with less short-term debt. Importantly, this finding is evident for firms going public after a reduction of total bank credits in the loan market. The result is robust to control for endogeneity concerns, selection biases, and alternative stories. Bear market IPOs repay more short-term debt during the IPO year than other IPOs do, and have lower offering prices and proceeds. Those results suggest that a credit crunch significantly affects timing and costs of IPOs