Showing papers by "IE University published in 1997"
TL;DR: In this paper, both univariate and multivariate tests were applied on a sample of German and UK initial public offerings (IPOs) to investigate whether ownership concentration and different types of large shareholders can account for differences in corporate profitability.
Abstract: This paper investigates whether ownership concentration and different types of large shareholders can account for differences in corporate profitability. Both univariate tests and multivariate tests are applied on a sample of German and UK initial public offerings (IPOs). It is particularly interesting to study German and UK IPOs for two reasons. First, comparing German and UK firms is beneficial in terms of a high cross-sectional variation of ownership, as both countries have financial markets characterized by different levels of ownership concentration. Most previous studies have suffered from a low cross- sectional variation. Second, analyzing IPOs over several years adds an interesting time-series variation to the study. The univariate study tests whether entrenchment by the initial large shareholder and a higher exposure to the disciplining role of the market for corporate control have any effects on a firm's financial performance. The multivariate study tests a dynamic model which relates current performance to past performance and ownership characteristics. We do not find any link between profitability and ownership and conclude that ownership is chosen in ways to maximize firm value.
6 citations
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TL;DR: In this paper, the authors analyzed the evolution of ownership and control in German and UK IPOs and explained why the pre-IPO shareholders of some firms sell out whereas those of other firms do not.
Abstract: This paper analyses the evolution of ownership and control in German and UK IPOs In a first stage we try to explain why the pre-IPO shareholders of some firms sell out whereas those of other firms do not German IPOs are matched by size with UK IPOs to obtain a first sample and matched by industry to obtain a second sample Ownership and control for both matched samples evolves in a different way An empirical model based on recent theories of ownership is specified, which explains differences in ownership within and across the two countries The main explanatory factors are different levels of risk, liquidity constraints of the initial shareholders and different levels of pre-IPO ownership concentration In a second stage we examine whether the targets of takeovers have different characteristics than firms that become widely held We do not find any major differences
3 citations