NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

The Evolution of Corporate Ownership After IPO: The Impact of Investor Protection

C. Fritz Foley, Robin Greenwood

NBER Working Paper No. 14557
Issued in December 2008
NBER Program(s):   CF   LE

Recent research documents that ownership concentration is higher in countries with weak investor protection. However, drawing on panel data on corporate ownership in 34 countries between 1995 and 2006, we show this pattern does not hold for newly public firms, which tend to have concentrated ownership regardless of the level of investor protection. We show that firms in countries with strong investor protection are more likely to experience decreases in ownership concentration after listing, that these decreases appear in response to growth opportunities, and that they are associated with new share issuance. We consider the implications of these findings for financing choices and patterns in firm growth and analyze alternative explanations for the diffusion of ownership that could distort our interpretations. We conclude that ownership concentration falls as firms age following their IPO in countries with strong investor protection because firms in these countries raise capital and grow, diluting blockholders in the process.

download in pdf format
   (209 K)

email paper

This paper is available as PDF (209 K) or via email.

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w14557

Users who downloaded this paper also downloaded these:
Pastor, Taylor, and Veronesi w12792 Entrepreneurial Learning, the IPO Decision, and the Post-IPO Drop in Firm Profitability
Ritter and Welch w8805 A Review of IPO Activity, Pricing, and Allocations
Doidge, Karolyi, and Stulz w16916 The U.S. Left Behind: The Rise of IPO Activity Around the World
Lowry, Officer, and Schwert w12295 The Variability of IPO Initial Returns
Bebchuk and Neeman w13702 Investor Protection and Interest Group Politics
 
Publications
Activities
Meetings
NBER Videos
Data
People
About

Support
National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us