From setback to comeback: Motivations for withdrawn IPO firms to return

•Second-time IPOs return to the market with the motivation to grow and expand through R&D and CAPEX.•The returning firms show significantly lower post-IPO acquisition activity compared to first-time IPOs.•R&D and CAPEX benefit the second-time IPOs in the long run in terms of stock performanc...

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Bibliographic Details
Published in:The Quarterly review of economics and finance 2017-11, Vol.66, p.259-264
Main Authors: Chen, Gaole, Sutton, Ninon, Qi, Jianping
Format: Article
Language:English
Subjects:
CAPEX
IPO
M&A
R&D
Return
Withdraw
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Summary:•Second-time IPOs return to the market with the motivation to grow and expand through R&D and CAPEX.•The returning firms show significantly lower post-IPO acquisition activity compared to first-time IPOs.•R&D and CAPEX benefit the second-time IPOs in the long run in terms of stock performance. Are withdrawn IPOs that return to the market driven by the same acquisition motive as first-time IPOs? We examine the investment decisions of second-time IPO firms after successfully going public. Our findings show that, contrary to first time IPOs, second-time IPOs are not active acquirers and spend significantly more on CAPEX and R&D than first-time IPOs. Unlike acquisitions in the post-IPO period, CAPEX and R&D spending benefit second-time IPOs’ long run performance.
ISSN:1062-9769
1878-4259
DOI:10.1016/j.qref.2017.03.002