Professor Glenn A. Okun
NYU Stern School of Business
August 14, 2023
Much attention is being paid to the impending ARM initial public offering. It is being watched as a sign of the return of the IPO market. It should not. If the offering is completed and is successful in its secondary market performance (because it trades consistently at ever higher prices compared to the IPO price), it may be the result of signals that have been bought by ARM pre-IPO.
Historically, under difficult exit conditions for firms, IPOs that have been completed have required window dressing or embellishments. These are superficial modifications that are intended to generate a signal that will be perceived by investors as an enhancement to the firm’s credibility, growth potential or stability and ultimately will cause an increase in valuation.
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