Template-Type: ReDIF-Paper 1.0
Author-Name: Roosenboom, P.G.J.
Author-Name-Last: Roosenboom
Author-Name-First: Peter
Author-Name: Schramade, W.L.J.
Author-Name-Last: Schramade
Author-Name-First: Willem
Title: The Price Of Power: Valuing The Controlling Position Of Owner-Managers In French Ipo Firms
Abstract: Going public often creates an agency conflict between the owner-manager and minority shareholders. This problem is especially severe in countries with poor legal investor protection, such as France. We examine the controlling position of owner-managers in French IPO firms. We find that investors anticipate the increased agency conflict associated with a lock on control and lower firm value when the owner-manager is more powerful. Shareholder agreements in which the owner-manager agrees to share control with other pre-IPO owners enhance firm value. We also report that higher cash flow ownership by the owner-manager is positively related to firm value when he is not in full control. Finally, we document that the large (non-pecuniary) private benefits of control in France may motivate owner-managers to retain control after the IPO.
Creation-Date: 2005-03-29
File-URL: https://repub.eur.nl/pub/1921/ERS%202005%20011%20F&A.pdf
File-Format: application/pdf
Series: RePEc:ems:eureri
Number: ERS-2005-011-F&A
Classification-JEL: G3, G32, M
Keywords: Ownership structure, going public, initial public offerings (IPOs)
Handle: RePEc:ems:eureri:1921