Public market staging: The timing of capital infusions in newly public firms

Michael Hertzel, Mark R. Huson, Robert Parrino

Research output: Contribution to journalArticlepeer-review

14 Scopus citations


We examine financing activities of newly public firms for evidence on capital staging in the public equity market. Staging (sequential financing) can increase issuance costs but can limit costs associated with overinvestment. We find evidence consistent with the hypothesis that staging is employed to help control the overinvestment problem in public firms. Initial public offering (IPO) proceeds, relative to external financing requirements, are smaller for firms with more intangible assets and more research and development (R&D)-intensive firms. Asset intangibility and R&D intensity are also both negatively related to the length of time from a firm's IPO to its first post-IPO capital infusion.

Original languageEnglish (US)
Pages (from-to)72-90
Number of pages19
JournalJournal of Financial Economics
Issue number1
StatePublished - Oct 1 2012


  • Cash holdings
  • Initial public offering
  • Managerial incentives
  • Staging of capital

ASJC Scopus subject areas

  • Accounting
  • Finance
  • Economics and Econometrics
  • Strategy and Management


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