Firm Transparency and the Costs of Going Public

Posted: 10 Oct 2000

See all articles by James S. Ang

James S. Ang

Florida State University; Florida State University - College of Law

James C. Brau

Brigham Young University

Abstract

We demonstrate in this study that firms that are more transparent pay less, in all components of issuance costs, to go public. We employ a sample of 334 previous leveraged buyouts and a characteristic-matched control sample to test the hypothesis that greater firm transparency before the issue decreases the flotation costs of the initial public offering. These flotation costs are divided into initial underpricing, the underwriter discount, administrative expenses, and the overallotment option required to take the firm public. Our results provide further evidence of the asymmetric information hypothesis as it applies to initial public offerings.

JEL Classification: G24, G32, M41

Suggested Citation

Ang, James S. and Brau, James C., Firm Transparency and the Costs of Going Public. Available at SSRN: https://ssrn.com/abstract=243975

James S. Ang

Florida State University ( email )

College of Business
Tallahassee, FL 32306-1042
United States
904-644-8208 (Phone)

Florida State University - College of Law ( email )

425 W. Jefferson Street
Tallahassee, FL 32306
United States

James C. Brau (Contact Author)

Brigham Young University ( email )

TNRB 640
Marriott School
Provo, UT 84602
United States
801-318-7919 (Phone)
801-422-0108 (Fax)

HOME PAGE: http://marriottschool.byu.edu/emp/brau/

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