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- Title
Ownership Structure and IPO Valuation--Evidence from Taiwan.
- Authors
Yin-Hua Yeh; Pei-Gi Shu; Re-Jin Guo
- Abstract
We investigate the effect of ownership structure on initial public offering (IPO) valuation in the Taiwanese market, in which many large shareholders exert control through pyramidal structures and cross-shareholdings with voting rights that are in excess of cash flow rights. Our analysis indicates that outside shareholders incorporate the effect of potential expropriation by entrenched large shareholders in valuing an IPO, since a deviating voting-cash structure is negatively associated with the valuation metric at both the offer and initial secondary market prices relative to the corresponding intrinsic value. We also show that a deviating voting-cash structure correlates negatively with IPO underpricing.
- Subjects
TAIWAN; GOING public (Securities); CASH flow; MARKET pricing; VALUATION; SECONDARY markets; STOCKHOLDERS
- Publication
Financial Management (Wiley-Blackwell), 2008, Vol 37, Issue 1, p141
- ISSN
0046-3892
- Publication type
Article
- DOI
10.1111/j.1755-053X.2008.00007.x