Do IPOs in Countries Where Firms Have High Family Control Benefit from More Prestigious Underwriters
Multinational Business Review, Vol. 16, No. 2, Special Issue, 2009
Posted: 13 Jan 2009
Date Written: January 13, 2009
We study the relationship between underwriter prestige, family control, and IPO underpricing in an international setting. Data are collected for 5,789 firms that went public across twenty-five countries between 1995 and 2002. We find that non-penny-stock and non-U.S. IPOs from countries where firms are predominately family-controlled benefit from associations with well-known investment bankers; i.e., these firms are less underpriced than similar firms from countries with a low level of family control. At the same time, our findings support prior evidence that suggests that underwriter prestige is positively related to underpricing in the U.S. IPO market. Family-controlled firms should consider the findings of this study, which identifies factors that are associated with more successful IPO outcomes.
Keywords: Initial Public Offerings, Family
JEL Classification: G1
Suggested Citation: Suggested Citation