From Shareholders to Markets: The Impact of Ownership Structure on IPO Performance in North Africa

Abstract

This research explores the impact of ownership structure on the financial performance of Initial Public Offerings (IPOs) in North African markets, a key emerging region that remains insufficiently examined in the academic literature. Drawing on agency theory, signalling theory, and liquidity theory, the study investigates how different shareholder configurations—particularly managerial shareholding, ownership concentration, institutional investor presence, and float—influence both initial underpricing and long-run market performance. Based on a sample of 228 IPO transactions conducted between 2005 and 2023 across six countries (Morocco, Egypt, Tunisia, Algeria, Libya, and Mauritania), the research adopts a quantitative methodology grounded in a hypothetico-deductive approach. The findings support the signalling theory premise that managerial retention constitutes a credible quality signal, showing a strong positive relationship between post-IPO managerial shareholding (MOWN) and long-run performance measured by the 36-month Buy-and-Hold Abnormal Return (BHAR). Ownership concentration (CONC) reduces underpricing while improving long-term performance, reflecting stronger governance discipline. Institutional investor presence (INST) exerts a significant direct effect on both performance dimensions. Conversely, firm size shows no direct significant effect, a result consistent with the institutional specificities of North African markets. These findings underscore the complex mechanisms behind IPO success in this context and offer practical and theoretical implications regarding governance practices and institutional frameworks. The study also outlines avenues for future research, including a deeper examination of regional governance dynamics.