Pre-IPO Ownership Structure And Its Impact On The IPO Process

Topics:
IPO
Tags:
IPO,
pre-IPO
Source:
University of New South Wales

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Overview: This paper investigates the impact of pre-IPO (Initial Public Offering) ownership structure on the proportion, allocation, and pricing of new issued shares, as well as the costs of going public. The authors found that retaining control is an important consideration for pre-IPO owners/managers. Where the pre-IPO ownership of managers indicates their highest sensitivity to control dilution, the firm issues the least shares and the new shares are not allocated in favor of new large shareholders. They also find that larger pre-IPO shareholdings create an incentive for managers to reduce the total cost of the issue. These results highlight the significance of recognizing that prior to going public, private firms are not always wholly owned by managers.

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Format: PDF | Size: 274KB | Date: Oct 2006 | Pages: 47

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