Where Have All the IPOs Gone? The Hard Life of the Small IPO, 6 Harv. Bus. L. Rev. 83 (2016)
We examine firm lifecycles of 3,081 IPOs from 1996-2012. We find that small IPOs have a different lifecycle than other, largercompanies. Withinfive years of an IPO, only 55% of small capitalizationcompanies remain listed on a public exchange, compared to 61% and 67%for middle and large capitalization companies, respectively. Small capitalizationcompanies generally delist either voluntarily or involuntarily, while mid and large capitalization companies largely exit the public market through takeover transactions.Those small com- panies thatremain listed largelyfail to grow, remainingin the small capitaliza- tion category. We use our findings to examine various theories explaining the decline of the small IPO. We find only minor evidence that regulatory changes caused the decline of the small IPO. The decline appears instead to be more attributableto the historicalunsuitabilityof smallfirmsfor the public market. Absent economicor market reforms thatchange smallfirm quality,further regu- latory reforms to enhance the small IPO market are thus unlikely to be effective or bring firms into the public market that have the horsepower to remain pub- licly listed.