K.U.Leuven - Departement toegepaste economische wetenschappen
DTEW Research Report 0305 pages:1-46
We empirically study the determinants of the size of the primary and secondary portion in IPOs. Simultaneously, the results provide additional information on the motives for going public. The data show that financing needs underlie the primary portion. Firms use combined offerings to enhance market liquidity, whereby information gathering by institutional investors is stimulated. Pre-allocation and post-IPO data on market liquidity and seasoned equity offerings support these findings. Somewhat surprisingly, the diversification motive does not seem to drive the size of the secondary portion; however, secondary offerings show relatively higher control turnover post-IPO.