IPO valuation of European pyramidal groups

The purpose of this study is to shed light on the valuation of firms belonging to European pyramidal groups at the time of their IPO. We question if the particularity in their ownership structure, and the identity of the ultimate shareholder, affect the valuation of the firms going public. With reference to firms that went public in Europe over the last decade, we find that value at IPO is affected by the affiliation to a pyramidal group, and by the ultimate controller identity, even when controlling for firm and offer specific variables, such as age, size, underpricing. In particular, companies under a pyramidal ownership are better valued: investors, therefore, recognize a positive value to pyramids affiliation, that may substitute for weak markets institutions.