Impact of managerial ownership on operational performance of IPO firms: French Context
In the literature, particular attention was mainly attributed to the managers/shareholders whose presence in the ownership structure has been treated as an important variable in explaining performance. Indeed, in an IPO operation, the interests of managers and shareholders become weakly aligned, because the participation of owner-manager decreases as the structure of ownership becomes more dispersed in response to new subscriptions that the company receives. Therefore, the performance of IPOs will be influenced by these changes (Mayur & al (2007)).
we considered interesting to refine our analysis of such shareholders by working to answer the following question:
What is the impact of managerial ownership on the long term operational performance of companies in the post-IPO period?
Our goal is to show that IPOs affect managerial ownership in the sense of improvement or deterioration of performance of companies after going public.
The purpose of this article was to present and explain the impact of managerial ownership on operating performance after going public. To conduct this study, we chose a plan to experiment on the Paris stock exchange. Our study covers a sample of 65 companies that entered the stock market during the period 2000-2006.
The dynamic analysis of panel data provides, through the combined use of GMM and instrumental variables, better estimators can tier the problem of endogeneity of variables.
Indeed, it is clear that dynamic analysis that companies whose "share held" by the managers/shareholders in the capital is the most important, do not seem to make better long-term performance (except for performance measured by profitability equity and asset turnover). This result does not corroborate the hypothesis of agency theory initiated by Jensen and Meckling (1976). In contrast, most of our results help to retain the assumption of timing in the sense that it is beneficial for manager to plan the introduction at a time when performance is particularly high to ensure its success. This facilitates later, his entrenchment. Therefore, a steeper decline in performance after IPO for the group of companies, where managers/shareholders hold a large share of ownership.