RFS Advance Access published online on September 23, 2009
Review of Financial Studies, doi:10.1093/rfs/hhp069
The Evolution of Corporate Ownership after IPO: The Impact of Investor Protection
Harvard University and NBER
Harvard University and NBER
Send correspondence to Robin Greenwood, Harvard Business School, Soldiers Field Road, Boston, MA 02163; telephone: 617-495-6979; fax: 617-496-8443. E-mail: rgreenwood{at}hbs.edu.
JEL Classification: G32, K22, O43
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Abstract |
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Panel data on corporate ownership in thirty-four countries between 1995 and 2006 reveal that newly public firms have concentrated ownership regardless of the level of investor protection. After listing, firms in countries with strong investor protection are more likely to experience decreases in ownership concentration; these decreases occur in response to growth opportunities, and they are associated with new share issuance. We conclude that ownership concentration falls after listing in countries with strong investor protection, because firms in these countries continue to raise capital and grow, diluting blockholders as a consequence.
A previous version of this paper was circulated as "The Evolution of Corporate Ownership: Evidence from 34 Countries." We are grateful to David Blitzer at Standard and Poor's for providing data, and Cliff Holderness, Andrew Metrick, and Karl Lins for sharing their data with us. Evie Spanos and Sonya Lai provided excellent research assistance. We thank Malcolm Baker, Mihir Desai, Cliff Holderness, Paul Gompers, Karl Lins, Randall Morck, Richard Ruback, David Scharfstein, Andrei Shleifer, Matt Spiegel, an anonymous referee, and seminar participants at the Darden International Finance Conference, Harvard, HKUST Business School, Singapore Management University, the University of Oregon, and the University of Texas at Austin for helpful comments. The Harvard Business School Division of Research provided funding for this study.