Beyond the IPO horizon: Understanding the determinants and consequences of IPO withdrawal

Abstract

Withdrawn IPOs remain an empirically underexplored topic. Between 1997 and 2021, approximately 1 in 6 IPOs attempted on the NASDAQ and NYSE were withdrawn, collectively amounting to hundreds of billions of dollars in unrealized growth capital. For entrepreneurial ventures, the strategic consequences of the withdrawal decision are severe. My findings indicate that withdrawn IPOs face a considerable delay in subsequent attempts to enter public markets, alongside a substantial reduction in total offer proceeds. Crucially, the JOBS Act in 2012 marks a pivotal inflection in the public markets, significantly reducing the incidence of IPO withdrawals and altering the course of financing strategies for emerging growth companies. I argue that an integrated recognition of both withdrawal activity and the regulatory dynamics of the JOBS Act is crucial for a complete understanding of the evolving IPO landscape. Moreover, I examine firm and CEO attributes that correlate with the withdrawal decision and discuss how withdrawal activity presents a fertile ground for future research.