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INITIAL PUBLIC OFFERING AND AGENCY COSTS
Abstract
The initial public offering (IPO) belongs to the major breakpoints in the life of a company. The transition from private into public trading represents a complex process and involves not only the existing shareholders but also other stakeholders. The study deals with agency costs that a company suffers during its IPO. I contend that these costs come from two major sources. Firstly, the agency costs resulting from relationship between shareholders and management are rising. Moreover, new subjects and new partnerships, e.g. partnership with underwriting company or with investors interested in IPO, are created. These new partnerships could be typical of agency costs phenomena as well. I therefore examine whether IPO process increases agency costs and I quantify the impact of major sources on agency costs. Firstly, I assembled the sample of newly publicly traded companies between 2011–2014. In the next step, I identified drivers that influenced agency costs and described their impact on total agency costs. I used comparative methods and descriptive statistics to support my findings.
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