Transfer of Control in British and German IPOs

[A. Marc Goergen]

The Transfer of Control in British and German IPOs

A. Marc Goergen
ISMA Centre, University of Reading

Contact: A. Marc Goergen <mailto:M.Go...@ISMAcentre.rdg.ac.uk>

URL: http://econwpa.wustl.edu/eprints/fin/papers/9804/9804005.abs

JEL Classification: G32 G34

Keywords: IPOs, corporate governance, corporate ownership

This paper analyses the evolution of ownership and control in German and
UK IPOs. In a first stage we try to explain why the pre-IPO shareholders
of some firms sell out whereas those of other firms do not. German IPOs
are matched by size with UK IPOs to obtain a first sample and matched by
industry to obtain a second sample. Ownership and control for both
matched samples evolves in a different way. An empirical model based on
recent theories of ownership is specified, which explains differences in
ownership within and across the two countries. The main explanatory
factors are different levels of risk, liquidity constraints of the
initial shareholders and different levels of pre-IPO ownership
concentration. In a second stage we examine whether the targets of
takeovers have different characteristics than firms that become widely
held. We do not find any major differences.