Impact of family ownership, management, and generations on IPO underpricing and long-run performance

This paper examines the impact of family ownership, management, and generations on IPO underpricing and the long-run performance of publicly listed firms in Indonesia from 2004 to 2015. This study is based on agency theory, which discusses the relationship between shareholders and management, as wel...

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Autores principales:	Lukas Setia-Atmaja, Yane Chandera
Formato:	article
Lenguaje:	EN
Publicado:	LLC "CPC "Business Perspectives" 2021
Materias:	family firms family generations family involvement IPO long-run performance IPO underpricing Finance HG1-9999
Acceso en línea:	https://doaj.org/article/088feb0220d848d0b31644c4ece9e4f4
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id	oai:doaj.org-article:088feb0220d848d0b31644c4ece9e4f4
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spelling	oai:doaj.org-article:088feb0220d848d0b31644c4ece9e4f42021-12-01T09:55:54ZImpact of family ownership, management, and generations on IPO underpricing and long-run performance10.21511/imfi.18(4).2021.231810-49671812-9358https://doaj.org/article/088feb0220d848d0b31644c4ece9e4f42021-12-01T00:00:00Zhttps://www.businessperspectives.org/images/pdf/applications/publishing/templates/article/assets/15867/IMFI_2021_04_Atmaja.pdfhttps://doaj.org/toc/1810-4967https://doaj.org/toc/1812-9358This paper examines the impact of family ownership, management, and generations on IPO underpricing and the long-run performance of publicly listed firms in Indonesia from 2004 to 2015. This study is based on agency theory, which discusses the relationship between shareholders and management, as well as controlling and non-controlling shareholders. Study results show that IPO underpricing was 28% higher for family firms than non-family firms. Among family firms, a family member’s presence as a Chief Executive Officer (CEO) significantly reduced the level of IPO underpricing. A negative relationship between family CEO and IPO underpricing was only observed if a CEO at the time of IPO was the founder instead of family descendants. A long-run return of family-firm IPOs was more likely to underperform their non-family-firm counterparts. The findings in the primary market suggest that investors predict bigger issues of agency conflicts between controlling and non-controlling shareholders in family firms than the issues of agency conflicts between shareholders and management in non-family firms. Since investors consider family-firm IPOs to be riskier than non-family firms, they demand a higher level of IPO underpricing to compensate for such risks. The results in the secondary market confirm the findings in the primary market.Lukas Setia-AtmajaYane ChanderaLLC "CPC "Business Perspectives"articlefamily firmsfamily generationsfamily involvementIPO long-run performanceIPO underpricingFinanceHG1-9999ENInvestment Management & Financial Innovations , Vol 18, Iss 4, Pp 266-279 (2021)
institution	DOAJ
collection	DOAJ
language	EN
topic	family firms family generations family involvement IPO long-run performance IPO underpricing Finance HG1-9999
spellingShingle	family firms family generations family involvement IPO long-run performance IPO underpricing Finance HG1-9999 Lukas Setia-Atmaja Yane Chandera Impact of family ownership, management, and generations on IPO underpricing and long-run performance
description	This paper examines the impact of family ownership, management, and generations on IPO underpricing and the long-run performance of publicly listed firms in Indonesia from 2004 to 2015. This study is based on agency theory, which discusses the relationship between shareholders and management, as well as controlling and non-controlling shareholders. Study results show that IPO underpricing was 28% higher for family firms than non-family firms. Among family firms, a family member’s presence as a Chief Executive Officer (CEO) significantly reduced the level of IPO underpricing. A negative relationship between family CEO and IPO underpricing was only observed if a CEO at the time of IPO was the founder instead of family descendants. A long-run return of family-firm IPOs was more likely to underperform their non-family-firm counterparts. The findings in the primary market suggest that investors predict bigger issues of agency conflicts between controlling and non-controlling shareholders in family firms than the issues of agency conflicts between shareholders and management in non-family firms. Since investors consider family-firm IPOs to be riskier than non-family firms, they demand a higher level of IPO underpricing to compensate for such risks. The results in the secondary market confirm the findings in the primary market.
format	article
author	Lukas Setia-Atmaja Yane Chandera
author_facet	Lukas Setia-Atmaja Yane Chandera
author_sort	Lukas Setia-Atmaja
title	Impact of family ownership, management, and generations on IPO underpricing and long-run performance
title_short	Impact of family ownership, management, and generations on IPO underpricing and long-run performance
title_full	Impact of family ownership, management, and generations on IPO underpricing and long-run performance
title_fullStr	Impact of family ownership, management, and generations on IPO underpricing and long-run performance
title_full_unstemmed	Impact of family ownership, management, and generations on IPO underpricing and long-run performance
title_sort	impact of family ownership, management, and generations on ipo underpricing and long-run performance
publisher	LLC "CPC "Business Perspectives"
publishDate	2021
url	https://doaj.org/article/088feb0220d848d0b31644c4ece9e4f4
work_keys_str_mv	AT lukassetiaatmaja impactoffamilyownershipmanagementandgenerationsonipounderpricingandlongrunperformance AT yanechandera impactoffamilyownershipmanagementandgenerationsonipounderpricingandlongrunperformance
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Impact of family ownership, management, and generations on IPO underpricing and long-run performance

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