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The Arrival Rate of Initial Public Offers in the UK
Author(s) -
Rees William P.
Publication year - 1997
Publication title -
european financial management
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.311
H-Index - 64
eISSN - 1468-036X
pISSN - 1354-7798
DOI - 10.1111/1468-036x.00030
Subject(s) - initial public offering , causality (physics) , incentive , stock market , economics , econometrics , value (mathematics) , stock (firearms) , financial economics , monetary economics , accounting , business , microeconomics , statistics , mathematics , engineering , mechanical engineering , paleontology , physics , horse , quantum mechanics , biology
The Initial Public Offer (IPO) is an important event in the development of a firm yet there is little evidence regarding why firms choose certain times to come to the market. This paper extends the available evidence, concentrating on UK data and addressing a number of econometric problems with earlier papers. These advances include acknowledging the non‐negative integer characteristics of count data, compensating for non‐stationarity in the data, and explicitly testing for causality. The paper examines the incentives to conduct an IPO and the results suggest that both the value and number of IPOs are positively and significantly associated with the level of the stock market, with the introduction of the USM, and, in the case of the number of IPOs, positively and significantly associated with a business cycle indicator. Tests of causality suggest that the stock index predicts both the value and number of IPOs.