THE STOCK-MARKET AS A SOURCE OF CAPITAL - SOME LESSONS FROM INITIAL PUBLIC OFFERINGS IN ITALY

This paper complements the analysis of the decision to go public conta ined in Pagano et al, (1995), We compare a larger set of Italian initi al public offerings, including holding companies, with size-matched pr ivate companies, Even in this larger sample we find evidence that: (i) the new equity capital raised upon listing is not used to finance sub sequent investment and growth; (ii) going public reduces the cost of c redit; (iii) it is often associated with equity sales by controlling s hareholders, and is followed by a higher turnover of control than for other companies. A novel finding is that the funds raised are used to purchase stakes in other companies and other financial assets.