Governance, ownership structure and performance of IPO firms: the impact of different types of private equity investors and institutional environments

This paper examines performance effects of ownership concentration and two types of private equity investors (venture capitalists and business angels) in firms that have recently undergone an initial public offering (IPO) in the United Kingdom and France. We expand and contextualize nascent understanding of multiple agency theory by examining heterogeneity of private equity investors and by suggesting that multiple agency relationships are affected by different institutional contexts. We employ a unique, hand-collected dataset of 224 matched IPOs (112 in each country). Controlling for the endogeneity of private equity investors? retained share ownership, we find support for the agency theory argument that concentrated ownership improves IPO?s performance. The research also shows that the two types of private equity investors have a differential impact on performance, and the legal institutions in a given country moderate this impact.