In this paper, the relation between insider's equity ownership and corporate value for 1128 initial public offerings (1980-1984) is investigated. The evidence shown here is consistent with the hypothesis that corporate value is a function of the structure of equity ownership, but inconsistent with the view that there can be "too much" inside ownership. It is found that ownership retention can only conditionally be interpreted as a signal of firm value. Specifically, an evaluation of ownership retention must control for firm size and wealth-effect exposure. © 1993.
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