DETERMINANTS OF PERFORMANCE OF CLOSELY – HELD (FAMILY) FIRMS AFTER GOING PUBLIC: THE ROLE OF THE OWNERSHIP STRUCTURE, ECONOMY, CHANGES IN TOP MANAGEMENT, PARTIAL SALE, EQUITY CONCENTRATION AFTER THE IPO AND SHAREHOLDERS IN MANAGEMENT

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Abstract

When a closely-held (family) company goes public, there are very specific and particular determinants that have crucial influences on the post-going public operational, social and financial performance of those firms. We investigate why firms decline significantly their profitability, efficiency, employment and activity levels, and show an increase on sales and capital investment when there is a transition from private to public ownership. We conclude that this decrease in performance is significantly higher, when one or more than one of the following facts happen after firms going public: first, when there are not shareholders in management, what implies increased agency costs; secondly, when the level of equity concentration after going public is low; in third place, when the level of equity retention by the founding shareholder is low; fourth, when the economy health during the timing of the sale is not in good shape; and lastly, when the old CEO is changed.

Keywords: Initial Public Offerings, Going Public, Separation of Ownership and Control, Economic, Social, Financial and Dividend Performance of Closely Held Companies

How to cite this paper: Vaz Ferreira, J. (2008). Determinants of performance of closely – held (family) firms after going public: the role of the ownership structure, economy, changes in top management, partial sale, equity concentration after the IPO and shareholders in management. Corporate Ownership & Control, 5(2), 55-67. https://doi.org/10.22495/cocv5i2p5