Agglomeration Effects in Initial Public Offerings

Shahram Amini, Andrew MacKinlay, Johan Sulaeman, and Chishen Wei

♦ We show that the decision to go public is influenced by spatial variation in the supply of equity financing. We measure the amount of capital of equity investors in each US region and document that the incidence of initial public offerings (IPOs) by intangible-intensive resident firms increases significantly when regional equity capital is abundant. Using a novel empirical strategy and hand-collected data on out-of-state pension flows, we confirm that our findings are not due to underlying regional factors.

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