The evolution of corporate governance mechanisms after going public: Evidence from Turkish panel data
This paper aims to investigate the effects of corporate governance mechanisms such as ownership, executive remuneration and lock-on control mechanisms on the management of post-IPO cash flows and the firm value. I conduct a panel data analysis by following each of the 68 non-financial firms listed on ISE over a time span of 8 years. In total, I collect 544 firm-year observations over the entire 1994-2005 period. I find a non-linear relationship between the retained proportion of the insiders' share holdings after IPO and the dependent variables (OPROA, ROA and Tobin's Q). There is no significant relation between executive remuneration and post-IPO operating and market performance. This may be due to the low pay for performance sensitivity of the executive remuneration data used in this study. I find a significant relation between ownership concentration as measured by Herfindahl indexes and the performance measures. I also distinguish mainly four types of contractual privileges (contractual devices or lock-on-control mechanisms) given to the controlling shareholders from the IPO prospectuses; "right to receive a pre-determined amount of dividend, right to buy new shares from the existing shareholders, appointment of the pre-determined number of board members and right to cast more than 1 vote for one share". I also find that these privileges have important implications for post- IPO performance in Turkey. © International Economic Society.