The flotation of companies on the stock market

摘要: Abstract In some countries the size of stock market and number listed companies have persistently lagged behind growth economy. Trading externalities can help explain this fact. An entrepreneur who goes public increases risk sharing opportunities for others. This externality lead to an inefficiently low also generate multiple equilibria when flotation decisions are positively correlated across entrepreneurs. happens if these face borrowing constraints lack liquidity, thus cannot diversify their portfolios unless they go public. It trading shares is costly, so that a sufficient issues must be lure investors into market.