The Impact of the Corporate Control Market on IPO Decisions

Entrepreneurs who take their firm public during an active corporate control market face an increased risk of losing control through a takeover. I examine the extent to which the threat of takeover impacts IPO firms' decisions and find that an active takeover market in an IPO firm's industry increases the probability that the firm incorporates in a state with statelevel antitakeover provisions. IPO firms backed by venture capital investors and reputable underwriters are less likely to incorporate in a state offering antitakeover provisions. A closer examination of equity carve-outs suggests that control is not a first- order consideration for some IPO firms.