BIt Notes 17

This article examines the evolution of ownership of cash flow rights and control of voting rights of firms that went public in Italy over the period 1985-2005. Italian firms use to go public with high levels of control. At the IPO, the ownership structure does not evolve towards a dispersed one. Even 10 years after the flotation, the initial ultimate shareholder retains the majority of voting rights. Though control is valuable, original owners do not systematically set up structures that dissociate cash flow from voting rights. Beginning with early ‘90s, the practice to create pyramidal structures or to issue non voting shares is greatly reduced. Family-controlled firms value control most and are less inclined to give up the majority of votes. When that happens, the control stake is sold to another blockholder on a friendly basis. Families that preserve majority control also reenter the capital market via a seasoned equity offering with less frequency.

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