The Role of Insider Influence in Mutual-to-Stock Conversions

Kenneth A. Carow, Steven R. Cox and Dianne M. Roden

Journal of Money, Credit and Banking, 2007, vol. 39, issue 6, pages 1285-1304

Abstract: Using a sample of 347 demutualizing thrifts from 1991 to 2004, we show that the level of inside participation is not a traditional signal of firm performance. We conclude that unanticipated inside participation reflects the incentives of insiders to reduce the size of the offer to influence the level of expected initial public offer (IPO) returns. We find unanticipated inside participation is related to lower offer size and higher initial returns, but we do not find a relationship between inside participation and post-IPO performance. Copyright 2007 The Ohio State University.

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