Going public and the ownership structure of the firm

Going public is a complex process with distinct markets for dispersed shares and controlling blocks. It is important to design the sale of new shares with the final ownership structure in mind. An optimal strategy for going public starts with the IPO, which is particularly suited for the sale of dis...

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Bibliographic Details
Published inJournal of financial economics Vol. 49; no. 1; pp. 79 - 109
Main Authors Mello, Antonio S., Parsons, John E.
Format Journal Article
LanguageEnglish
Published Amsterdam Elsevier B.V 01.07.1998
Elsevier
Elsevier Sequoia S.A
SeriesJournal of Financial Economics
Subjects
Capital formation
Economic theory
Financial economics
Firm theory
Going public
Heterogeneous investors
Ownership structure
Sale of shares
Stock exchange
Stock offerings
Stockholders
United States > US
Ownership structure
Sale of shares
Heterogeneous investors
G32
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Summary:Going public is a complex process with distinct markets for dispersed shares and controlling blocks. It is important to design the sale of new shares with the final ownership structure in mind. An optimal strategy for going public starts with the IPO, which is particularly suited for the sale of dispersed holdings to small and passive investors. The marketing of potentially controlling blocks to active investors should occur subsequently. We develop a framework for evaluating alternative methods of sale and show that discriminating in favor of active investors can raise the market value of the firm for all shareholders.
Bibliography:ObjectType-Article-2
SourceType-Scholarly Journals-1
ObjectType-Feature-1
content type line 23
ISSN:0304-405X
1879-2774
DOI:10.1016/S0304-405X(98)00018-X