Bayar, Onur; Chemmanur, Thomas J. - In: Journal of Financial and Quantitative Analysis 46 (2012) 06, pp. 1755-1793
We analyze a private firm’s choice of exit mechanism between initial public offerings (IPOs) and acquisitions, and we provide a resolution to the “IPO valuation premium puzzle.” The private firm is run by an entrepreneur and a venture capitalist (VC) (insiders) who desire to exit partially...