Which of the following is NOT generally considered a cost of going public?
A)Underpricing: IPOs appear to be substantially underpriced.
B)Competition: Now that the firm is more visible, industry rivals will compete more intensively.
C)Issuance Costs: The typical underwriter spread for an IPO is 7% of the offering proceeds.
D)Management's time in preparing for the offering.
E)Loss of Control: New equityholders may press the firm to change its investment, financing, or dividend policies, and may also attempt to replace the firm's original management team.

Question

Quizplus · Accepted Answer

Competition is not typically considered a direct cost of going public. The primary costs associated with an IPO include underpricing, issuance costs, management's time, and potential loss of control, but not an increase in competition due to the firm's higher visibility.

Which of the Following Is NOT Generally Considered a Cost