This chapter investigates the use of defensive mechanisms disconnecting cash flow rights from voting rights at initial public offering (IPO) by controlling shareholders. It specifically examines whether founder-chief executive officers (CEOs) are more inclined than non-founder-CEOs to implement defensive mechanisms at IPO. Building on intrinsic and extrinsic attributes distinguishing founder-CEOs from other types of CEOs, this study suggests that founder-CEOs, who are generally controlling shareholders of the company at IPO, are likely to be more anxious about a post-IPO change of control relative to non-founder-CEOs. This in turn makes them more inclined to use defensive mechanisms at IPO. Empirical support for these arguments is provided using a unique hand-collected dataset of all 467 IPOs completed in the French capital markets from 1992 to 2010.
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