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Presentation by Frederic Delmar (Lund University)

Monday, October 10, 2016
12:00pm – 1:30pm

Storrs Campus
BUSN 321

The Best of Both Worlds: How Do Founder-CEOs Overcome the King Versus Rich Dilemma at IPO.

Abstract: To prevent loss of control post-IPO, founder-CEOs can implement defensive mechanisms disconnecting cash-flow rights from voting rights. However, this decision places them in a king versus rich dilemma. If they choose to implement defensive mechanisms and secure the king position, they risk losing money at IPO. If, they choose not to implement defensive mechanisms and adopt the rich position they risk losing control over the firm. Building upon principal-principal agency theory, we investigate the outcomes of this dilemma in the French IPOs context between 1992 and 2010. Results show that founder-CEOs choosing the king option suffer financial loss at IPO. However, rather than engaging in principal-principal agency actions, their stewardship behavior allows them to recover that loss in the long-run post-IPO.

Contact:

pcosta@business.uconn.edu

Management Department (primary), Accounting Department, Finance Department, Marketing Department, Operations and Information Management - OPIM, School of Business, School of Business Office of Undergraduate Advising, UConn Master Calendar

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