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- Title
Ownership Structure and Long-Run Performance of French IPO Firms.
- Authors
BOUBAKER, SABRI; CELLIER, ALEXIS; MANITA, RIADH; TOUMI, NARJESS
- Abstract
Many studies have attempted to explain the long-term underperformance phenomenon of initial public offerings (IPOs). In this paper, we use the specificities of the French market to analyze whether the control-ownership wedge explains IPO long-run performance. Moreover, we investigate whether this relationship is driven by high-tech firms. Using data from a sample of 402 French high-tech and non-high-tech IPOs that went public during 1997-2011, we find that the separation of ownership and control rights of the largest shareholder is negatively associated with long-term performance of French IPOs. This finding indicates that IPOs with disproportional ownership structure underperform other firms in the one-to five-year period following the initial offering. Such separation increases the likelihood that controlling shareholders extract private benefits of control to the detriment of minority shareholders, leading to a low long-term performance. The empirical findings also show that our conclusions are not driven by high-tech firms.
- Subjects
GOING public (Securities); MINORITY stockholders; BUSINESS enterprises
- Publication
Management international / International Management / Gestiòn Internacional, 2020, Vol 24, Issue 5, p135
- ISSN
1206-1697
- Publication type
Article
- DOI
10.7202/1075486ar