Does Ownership Structure Affect Ipo Valuation?

Abstract

The purpose of this study is to shed light on the valuation of firms at the time of their IPO. We question if the particularity in the corporate governance and ownership of European companies affect the valuation of the firms going public. With reference to the 3.052 firms that went public in Europe in the last decade, we find that value at IPO is driven by firm and offer specific variables, such as age, size, underpricing, as well as by variables measuring the separation of ownership and control. In particular, investors to some extent anticipate the higher possibility to be expropriated when pricing shares of companies owned by a pyramidal group.

Keywords: Ipo, Valuation, Ownership Structure

JEL Classification: G32