NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH
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Liu Yang

Department of Finance
Robert H. Smith School of Business
4420 Van Munching Hall
University of Maryland
College Park, MD 20742-1815
Tel: 301-405-5295

E-Mail: EmailAddress: hidden: you can email any NBER-related person as first underscore last at nber dot org
Institutional Affiliation: University of Maryland

NBER Working Papers and Publications

March 2019Do Public Firms Respond to Industry Opportunities More Than Private Firms? The Impact of Initial Firm Quality
with Vojislav Maksimovic, Gordon M. Phillips: w25634
We track firms at birth and compare the growth pattern of IPO firms and their birth-matched counterparts. Firms that are larger at birth with faster initial growth are more likely to attain a larger size later in life and go public. Firms in the top percentile of predicted propensity to go public grow 29 times larger fifteen years later than matched firms if they actually become public, and 14 times larger if they stay private, showing a large selection effect. We show that public firms, and especially those public firms backed by venture capital, respond more to demand shocks post-IPO.
December 2017Do Public Firms Respond to Investment Opportunities More than Private Firms? The Impact of Initial Firm Quality
with Vojislav Maksimovic, Gordon M. Phillips: w24104
Using U.S. Census data, we track firms at birth and compare the growth pattern of IPO firms and their matched always-private counterparts over their life cycle. Firms that are larger at birth with faster initial growth are more likely to attain a larger size and to subsequently go public. We estimate a model to predict the propensity to become public (“public quality”) using initial conditions. Firms in the top percentile of public quality grow 29 times larger than the remaining firms fifteen years later if they actually become public and 14 times larger if they stay private, showing a large selection effect for IPO status. Public firms respond more to demand shocks after their IPO and are more productive than their matched private counterparts. This effect is stronger in industries that a...
 
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