Control Considerations of Newly Public Firms: The Implementation of Antitakeover Provisions and Dual Class Shares Before the IPO

52 Pages Posted: 22 Feb 1999

See all articles by Laura Casares Field

Laura Casares Field

University of Delaware - Alfred Lerner College of Business and Economics

Date Written: February 10, 1999

Abstract

This paper examines the security design of a large sample of U.S. firms issuing initial public offerings (IPOs) and provides evidence on control considerations for these firms. I find that 47% of firms implementing IPOs include antitakeover provisions or bylaws in their corporate charters, while more than 5% go public with multiple classes of stock outstanding. In support of the theoretical findings of Grossman and Hart (1988), I find evidence consistent with private benefits for incumbents of IPO firms implementing multiple class structures. Evidence is also presented that IPO firms implementing antitakeover provisions are of higher quality than those not implementing provisions and that IPO firms implementing antitakeover provisions are less likely to be subsequently acquired.

JEL Classification: G32, G34

Suggested Citation

Field, Laura Casares, Control Considerations of Newly Public Firms: The Implementation of Antitakeover Provisions and Dual Class Shares Before the IPO (February 10, 1999). Available at SSRN: https://ssrn.com/abstract=150488 or http://dx.doi.org/10.2139/ssrn.150488

Laura Casares Field (Contact Author)

University of Delaware - Alfred Lerner College of Business and Economics ( email )

419 Purnell Hall
Newark, DE 19716
United States
302-831-3810 (Phone)

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