Relationship between Company Performance Change and Insider Ownership Change: Evidence from Taiwan IPOs firm

This study is focus on “Internal Ownership Change” and “Company Performance Change”. Observations of the initial public offerings companies are made within 1992-2012 time frame. By surveying IPOs’ dilution, this thesis tries to review how IPO companies’ performance will change. The empirical result shows that after the companies list on exchange, performance drops dramatically year by year. Besides, we focus on the cause to this phenomenon, especially on the internal ownership change. Based on the empirical results of our research, we are confident that there consists a non-linear relationship between internal ownership structure change and company performance change, which follows the pattern “positive, negative and positive” as internal ownership change increases. In fact, this thesis bumps into polynomial regression models and endogeneity problem together, we therefore use control function method to solve the endogeneity problem. In the end, we substitute the internal ownership definition by using ultimate control’s ownership and ultimate control’s cash flow right.