Restaurant firms’ IPO motivations and post-IPO performances: Staying public, being delisted or merged?

Sung Gyun Mun, Soo Cheong (Shawn) Jang

Research output: Journal article publicationJournal articleAcademic researchpeer-review

6 Citations (Scopus)


Purpose: This study aims to identify why restaurant firms go public (IPO) despite high financing costs and which factors make firms stay public for the long term after an IPO. Also, this study aimed to link and compare restaurant firms’ pre- and post-IPO accounting information and how IPO proceeds were used. Design/methodology/approach: This study used random-effects regression analysis with a number of dependent variables for a sample of 1,347 unbalanced panel data. In addition, logistic regression analyses were used to identify why restaurant firms were delisted within short periods after going public. Findings: First, rebalancing financial structures was the most important reason for IPOs, whereas financing future growth was only a minor motivation. Second, post-IPO performance significantly differed between restaurant firms based on their pre-IPO financial conditions, as well as how they used IPO proceeds. Third, restaurant firms with low profitability, inefficient non-operating expenses and difficulties in generating revenue increased their financial burdens, which ultimately caused restaurant firms to be delisted within a short period after an IPO. Furthermore, the reasons for merging included cash shortages, large short-term liabilities and increased major operating expenses, together with increases in capital expenditures. Originality/value: This study is unique, in that it explains the relationships between motivations for going public and post-IPO performances by directly linking the usages of IPO proceeds with firms’ operational performances. To the best of the authors’ knowledge, this study is the first to examine the effects of IPOs on restaurant firms’ operational, non-operational, investment and financial activities on firms’ performances.

Original languageEnglish
Pages (from-to)3484-3502
Number of pages19
JournalInternational Journal of Contemporary Hospitality Management
Issue number9
Publication statusPublished - 9 Sept 2019


  • 2019 IPO
  • Being delisted
  • IPO motivations
  • Merged
  • Post-IPO performance
  • Restaurant firms

ASJC Scopus subject areas

  • Tourism, Leisure and Hospitality Management


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