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THE ECONOMICS AND IMPLICATIONS OF AN INTIAL PUBLIC OFFERING
Abstract
This paper aims at providing insight into the mechanics of an initial public offering, for both companies prospecting the choice of financing themselves on the market as well as investors looking to build their portfolio. The study shows that for certain applications, getting finance through an IPO is a very compelling and flexible option for companies as well as provide valid opportunities for investors. For emerging market IPOs should be a tool for development aside from classic debt instruments, however potential investors need to be aware of risks and drawbacks associated with the decision to participate or underwrite in an IPO.
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