WHY GO PUBLIC? An EMPIRICAL ANALYSIS of IPO’s COMPETITIVE EFFECT on TURKISH FIRMS

Abstract

The motivation of this study is to approach the IPO issue from a different perspective. Most of the studies in the existing literature deal with three broad issues which are operating performance, stock performance, and the reasons to go public. However, there aren’t many studies which tackle the IPO issue from a pure competitive perspective which enables limited but clear results. This study contributes to the literature, not by answering a broad and old question but by providing new and partial evidence which seem to contradict the whole at first glance. Most of the 60 BIST (Borsa Istanbul) listed large industrial firms in this study have improved their relative ranks after their IPOs, when compared to their own large competitors most of which are not listed in BIST. These ranks are available in Turkey’s TOP 1.000 Industrial Enterprises annual lists and they are officially assigned by ICI (Istanbul Chamber of Industry) according to firms’ sales revenue figures. Thus, they provide us with the single and clear window to observe. Keeping in mind that this window is limited, this study comes up with some non-negligible findings and then elaborates on their significance for the IPO literature, raising more questions than answers for the sake of a more solid theory.

Keywords

• Initial public offerings (IPO)
• Borsa Istanbul (BIST)
• Competitive Effect
• Finance and Product Market Competition
• Large Industrial Firms

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