Abstract
Recent research documents that ownership concentration is higher in countries with weak investor protection. However, drawing on panel data on corporate ownership in 34 countries between 1995 and 2006, we show that these market-wide characteristics bear little relation to the ownership structure of newly public firms, which almost universally list with low float. What reconciles these two stylized facts? We show that firms in countries with strong investor protection are more likely to experience decreases in ownership concentration after listing, that these decreases appear to occur in response to growth opportunities, and that they are associated with new share issuance. Therefore, one of the key reasons that ownership concentration falls as firms age following their IPO in countries with strong investor protection is that firms raise capital and grow, diluting blockholders in the process.
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