Ownership Structure and Long-Run Performance of French IPO Firms

Estructura de propiedad y rendimiento a largo plazo de las ofertas públicas iniciales (OPIs) en el mercado francés

Sabri Boubaker, Alexis Cellier, Riadh Manita and Narjess Toumi
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Sabri Boubaker: Métis Lab EM Normandie - EM Normandie - École de Management de Normandie = EM Normandie Business School, VNU - Vietnam National University [Hanoï]
Alexis Cellier: IRG - Institut de Recherche en Gestion - UPEC UP12 - Université Paris-Est Créteil Val-de-Marne - Paris 12 - Université Gustave Eiffel
Riadh Manita: NEOMA - Neoma Business School

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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.

Keywords: Control-ownership divergence; IPOs; Hgh-tech firms; Controlling shareholders; Long-term performance; OPIs; Empresas de alta tecnología; Rendimiento a largo plazo; Divergencia control-propiedad; Accionistas; Séparation contrôle-propriété; Actionnaire contrôlant; Performance à long terme; Introduction en bourse (search for similar items in EconPapers)
Date: 2021-02-25
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Published in Management international = International management = Gestión internacional, 2021, 24 (5), pp.135-152. ⟨10.7202/1075486ar⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-05469663

DOI: 10.7202/1075486ar

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