Family Firms and the Decision to Go Public: A Study of Italian Ipos

Abstract

Past studies on public equity capital options concentrated on the financial or the institutional side of the process. The finance literature considered going public mainly as a way to access new sources of funds and to decrease the cost of capital. Within the family business field, most scholars focused on the benefits of going public for family succession and the survival of the firm after the founder. Although some scholars suggest that going public may have also an important strategic rationale, the hypothesis has not been subject to extensive empirical research. In this paper, combining evidence from a comparative case study and an extensive survey of recent Italian IPOs, we investigate the consequences of going public for the capacity of the companies to build and sustain competitive advantage, through an increase in their reputational and social capital.