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Managerial Ownership Structure and IPO Survivability

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  • Chi-Yih Yang
  • Her-Jiun Sheu

Abstract

Based on agency theory [Jensen and Meckling: 1976, Journal of Financial Economics 3: 305–360] how managerial stock ownership affects the survival of initial public offerings (IPOs) is explored in this paper. A sample of 560 IPOs listed in Taiwan is examined using the accelerated failure time model, a survival analysis technique. Insiders, the broad definition of management, are further classified into top officers and outside directors to conduct a detailed study. It is observed that the survival time of IPOs first decreases and then increases with the percentage of total insider ownership at the time of offering, forming a U-shaped relationship. Additionally, the survival time is positively affected by the officer-to-insider holding ratio. The results suggest that equity stake owned by management, particularly by top officers, of an IPO firm should be encouraged in order to reduce agency cost, and thus enhance firm survivability in the aftermarket. Copyright Springer 2006

Suggested Citation

  • Chi-Yih Yang & Her-Jiun Sheu, 2006. "Managerial Ownership Structure and IPO Survivability," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 10(1), pages 59-75, March.
    • Handle: RePEc:kap:jmgtgv:v:10:y:2006:i:1:p:59-75
    DOI: 10.1007/s10997-005-3552-9
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    Citations

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    Cited by:

    1. Pierpaolo Pattitoni & Barbara Petracci & Massimo Spisni, 2015. "“Hit and Run” and “Revolving Doors”: evidence from the Italian stock market," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 19(2), pages 285-301, May.
    2. Garima Baluja, 2018. "Does Size Matter for IPO Survival? Empirical Evidence from India," Vision, , vol. 22(1), pages 88-104, March.
    3. HONJO Yuji & KURIHARA Koki, 2021. "Graduation of Initial Public Offering Firms from Junior Stock Markets: Evidence from the Tokyo Stock Exchange," Discussion papers 21049, Research Institute of Economy, Trade and Industry (RIETI).

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