Ownership and operating performance in an emerging market: evidence from Thai IPO firms

Abstract

We examine the operating performance of Thai firms after they go public. Overall, we find that their performance declines. We then explore the relationship between managerial ownership and the change in firm performance. We find that firms with 'low' and 'high' levels of managerial ownership experience positive relationships between managerial ownership and the change in performance (alignment-of-interest hypothesis), while firms with 'intermediate' levels of managerial ownership exhibit a negative relationship between managerial ownership and the change in performance (entrenchment hypothesis). Examining the operating performance of IPO firms from an emerging market and finding a curvilinear relationship between managerial ownership and the post-IPO change in performance represents two significant contributions to the IPO literature. D

Effects of Family Ownership, Debt and Board Composition on Mexican Firms Performance

“…This situation tends to be altered whenever control rights exercised by the family exceeds their cash flow rights. Some studies undertaken in emerging countries, on the other hand, have shown a negative association between ownership concentration and financial performance, as the ones done in Chile by Espinosa [31], Shah, Butt, and Saeed [32,33] in South Asia, and Pervan, Pervan, and Todoric [34] in Croatia. Several studies, however, have rejected the presence of a significant relationship in this regard.…”

Board Mechanisms and Malaysian Family Companies’ Performance

“…In terms of financial performance indicators, this study used three performance indicators: tobin's Q, EPS (Kaplan 1989;Jain & Kini 1994;Kim, Kitsabunnarat & Nofsinger 2002).therefore, this study considers both the marketbased and accounting based approach. the accounting performance measure is claimed to be a better performance measure than share market based measures.…”

A Multi-Criteria Performance Analysis of Initial Public Offering (Ipo) Firms Using Critic and Vikor Methods

“…They have also found that older and well-established firms tend to have better performance relative to small firms. Kim et al (2004) has examined changes in ABP of Thai IPO firms, and has found that their post-IPO performance declines similar as Jain and Kini (1994) and Mikkelson et al (1997). Their results support that there is a relationship between firm age and the performance, but there is no link between the performance and the size of firm.…”

“…Almost all studies on performance assessment of IPOs in emerged and emerging markets have found that accounting performance of IPOs becomes a significant decline post-IPO relative to pre-IPO (e.g. Jain, Kini 1994;Mikkelson et al 1997;Kim et al 2004;Wang 2005;Alanazi et al 2011;Alanazi, Liu 2013). According to Jain and Kini (1994) who examine the ABP of US IPOs, accounting performance of the post-IPO has been declining.…”

“…In addition, several studies have found that accounting performance of IPOs deteriorates following going public (e.g. Jain, Kini 1994;Mikkelson et al 1997;Kim et al 2004;Wang 2005).…”