Home

How Making it Easier to Succeed Reduces Success: IPO Reform and New Firm Performance

Robert Eberhart; Kathleen Eisenhardt; Charles Eesley

Title:
How Making it Easier to Succeed Reduces Success: IPO Reform and New Firm Performance
Author(s):
Eberhart, Robert
Eisenhardt, Kathleen
Eesley, Charles
Date:
Type:
Working papers
Department:
Center on Japanese Economy and Business
Permanent URL:
Series:
Center on Japanese Economy and Business Working Papers
Part Number:
322
Abstract:
We examine how institutional changes that lower the barriers to successful exit influence the rate of IPO’s, the initial capitalization, and the performance of subsequent ventures. Such IPO market reforms are widespread, but their effectiveness is unclear. To do so, we take advantage of a quasi-natural experiment in which the IPO listing requirements in Japan were dramatically reduced. Using a unique database of over 19,000 new firms incorporated after 1982, we find that IPO market reform is a powerful institutional lever that increases the rate of IPOs. But it is also a narrow instrument that influences only few industries and triggers poor average performance in those industries. Overall, we find that IPO market reform is a complex institutional change. We conclude with contributions at the nexus institutional theory and entrepreneurship that indicate where and for whom institutional change will be effective.
Subject(s):
Economics
Finance
Item views:
368
Metadata:
text | xml

In Partnership with the Center for Digital Research and Scholarship at Columbia University Libraries/Information Services | Terms of Use