Going public in Mexico

Abstract

Purpose The purpose of this paper is to examine the factors that affect the likelihood of being public using a comprehensive database of private and public companies in Mexico, from all sectors, during 2006-2014. Design/methodology/approach The authors estimate a longitudinal probit model to identify the ex ante characteristics of public Mexican firms that differentiate them from those Mexican firms that continue to remain private. Findings The authors find that larger, younger and less levered Mexican firms are more likely to be public in Mexico. They additionally test the influence of market conditions and location on the probability of being public. They find that location matters but they find no evidence that initial public offerings (IPOs) are driven by favorable Mexican market conditions. Originality/value This paper contributes to the Mexican and international literature on IPOs because it uses an original database built from information of private and public Mexican firms. The study contributes to a better understanding of the determinants of the decision of going public in Mexico.