Why do not companies go public? Evidence from the IPOs in Italy and in the UK

This paper infers some determinants of the low propensity of firms to go public by comparing the IPOs in Italy to those in the UK and offers insight into the question of why only a few large companies go public in Europe. The topic is addressed from two standpoints, the ex-ante characteristics of the firms going public and their ex-post performance. The first part of the study highlights the differences between the two countries concerning the offering methodologies (the most adopted method in the UK is the placing that put much more reputational capital at risk compared to the public offers), the industrial composition (scarce propensity to listing localized in definite industries), and the firms’ ownership at the IPO (no divestment by the existing shareholders at the IPO on the AIM). The second part investigates the aftermarket and shows that firms listed in the UK are more subject to delisting, in particular due to takeovers. Nevertheless the post-issue profitability of the Italian IPO-firms does not outperform that of the UK counterparts. The aftermarket is especially a period of high investments for the companies on the AIM, where the firm’s growth is not achieved sacrificing the firms’ profitability.