The Long and Short of It : Do Public and Private Firms Invest Differently?
Abstract: Using data from U.S. corporate tax returns, which provide a sample representative of the universe of U.S. corporations, we investigate the differential investment propensities of public and private firms. Re-weighting the data to generate observationally comparable sets of public and private firms, we find robust evidence that public firms invest more overall, particularly in R&D. Exploiting within-firm variation in public status, we find that firms dedicate more of their investment to R&D following IPO, and reduce these investments upon going private. Our findings suggest that public stock markets facilitate greater investment, on average, particularly in risky, uncollateralized investments.
File(s): File format is application/pdf https://www.federalreserve.gov/econres/feds/files/2018068pap.pdf
Part of Series: Finance and Economics Discussion Series
Publication Date: 2018-09-28
Pages: 48 pages