To IPO or not to IPO: Risks, uncertainty and the decision to go public

We employ three views of agency theory in unison to investigate managerial risk-taking in uncertain markets. Using 124 firms that filed to go public toward the end of the technology boom (2000-2002), we explore the influence of CEO ownership on the decision to continue or withdraw an initial public offering (IPO) in deteriorating public equity markets. We find an inverse U-shaped relationship between CEOs' equity participation and the decision to proceed with a public offering: the probability of IPO cancellation in weak capital markets increases as CEOs hold too little or too much ownership. Our results also indicate that a firm's debt levels are positively linked with the IPO decision. CEO ownership and leverage intensity interact to influence the decision to take a firm public.