Structuring the IPO : Empirical Evidence on Primary, Secondary and Combined Offerings

We empirically study the forces that drive the primary and secondary portion of the shares placed in public during IPOs. Simultaneously, the results shed additional light on the motives for going public. The data show that the need for additional equity underlies primary and combined offerings. Also, firms use combined offerings to create market liquidity while overall firms with a primary portion stimulate information gathering by institutional investors. Pre-allocation and post-IPO data support these arguments. Somewhat surprisingly, in secondary offerings the diversification motive does not drive the deal structure; however, ex post these offerings show relatively higher control turnover