The Strategy of Going Public: How UK Firms Choose Their Listing Contracts


  • Marc Goergen,

  • Arif Khurshed,

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  • Ram Mudambi

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    • *

      The authors are respectively from the University of Sheffield Management School and the European Corporate Governance Institute (ECGI); the Manchester Business School, University of Manchester; and Fox School of Business and Management, Temple University. They are grateful to the editor, an anonymous referee and Susanne Espenlaub for valuable comments. They would also like to express their gratitude to the participants at the annual meeting of the European Financial Management Association in Athens and the ABN AMRO IPO Conference in Amsterdam. The usual disclaimer applies. (Paper received July 2002, revised version accepted March 2005.)

†Arif Khurshed, Manchester Business School, University of Manchester, Booth Street West, Manchester M15 6PB, UK.


Abstract:  UK firms going public have a choice between public offers and placings. This choice has important implications in terms of who bears the risk of the issue failing and of its costs. We find that firms with higher ex ante uncertainty choose a placing contract. Highly reputable sponsors and creditor screening serve as signals of firm quality, enabling such firms to choose a public offer. Large and multinational firms usually choose a public offer whereas there is some evidence that very small issues choose a placing. Finally, the ‘hotness’ of the IPO market increases the probability of placings.