Journal article
Bucking the trend: Why do IPOs choose controversial governance structures and why do investors let them?
Journal of financial economics, v 146(1), pp 27-54
Oct 2022
Abstract
While the percentage of mature firms with classified boards or dual class shares has declined by more than 40% since 1990, the percentage of IPO firms with these structures has doubled over this period. We test whether IPO firms implement these structures optimally or whether they are utilized to allow managers to protect their private benefits of control. Both shareholder voting patterns and changes in firm types going public suggest that the Agency Hypothesis best explains IPO firm's use of dual class, particularly when there is a large voting-cash flow wedge. In contrast, among firms with high information asymmetry, classified board structures are better explained by the Optimal Governance hypothesis.
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Details
- Title
- Bucking the trend: Why do IPOs choose controversial governance structures and why do investors let them?
- Creators
- Laura Casares Field - University of Delaware, 306A Purnell Hall, Newark, DE 19716, United StatesMichelle Lowry - Drexel University, 3220 Market Street, Philadelphia, PA 19104, United States
- Publication Details
- Journal of financial economics, v 146(1), pp 27-54
- Publisher
- Elsevier
- Resource Type
- Journal article
- Language
- English
- Academic Unit
- Finance
- Web of Science ID
- WOS:000855051300002
- Scopus ID
- 2-s2.0-85134814596
- Other Identifier
- 991019174515804721
InCites Highlights
Data related to this publication, from InCites Benchmarking & Analytics tool:
- Collaboration types
- Domestic collaboration
- Web of Science research areas
- Business, Finance
- Economics