• Media type: E-Book
  • Title: Control as a Motivation for Underpricing : A Comparison of Dual- and Single-Class Ipos
  • Contributor: Smart, Scott [Author]; Zutter, Chad J. [Other]
  • imprint: [S.l.]: SSRN, [2014]
  • Extent: 1 Online-Ressource (41 p)
  • Language: Not determined
  • DOI: 10.2139/ssrn.236107
  • Identifier:
  • Origination:
  • Footnote: Nach Informationen von SSRN wurde die ursprüngliche Fassung des Dokuments August 2000 erstellt
  • Description: We find that dual-class firms experience less underpricing, higher post-IPO institutional ownership, and less frequent control events than single-class firms. Each finding is consistent with the quot;reduced monitoring hypothesisquot; of Brennan and Franks (1997), which explains underpricing as a mechanism by which insiders create dispersion in the post-IPO ownership structure. By separating cash flow and voting rights, dual-class managers can raise capital without sacrificing control. Having ensured voting control, dual-class issuers have no incentive to underprice to limit large shareholders' post-IPO monitoring. Although dual-class firms achieve a lower underpricing cost relative to single-class firms, they trade at lower pricing multiples
  • Access State: Open Access