Private benefits extraction by the initial owner and the dynamic of ownership and control post‐initial public offering

摘要

>We investigate the relation between the private benefits' extraction by the initial controlling shareholder and the likelihood of the change of control post‐initial public offering (IPO) in France. We find that (a) in a weak investor protection context, the initial controlling shareholder with high private benefits of control is less likely to relinquish control 5‐years post‐IPO. (b) The initial controlling shareholder extracts private benefits of control through high voting rights and when the founder is involved in control at IPO. (c) Family controlling shareholders are less likely to end up with change of control post‐IPO than nonfamily ones. Such behavior is more pronounced with substantial voting rights, when the founder is in control and when the founder or his heir is an executive director. High private benefits of control contribute therefore to foster the survival of the initial controlling shareholder post‐IPO. Our findings are robust even after using alternative proxies of private benefits of control and also after running a survival analysis.