OWNERSHIP AND OPERATING PERFORMANCE OF COMPANIES THAT GO PUBLIC

Going public typically leads to a separation of managerial control and stock ownership, and potentially worsens managerial incentives. We do cument that the median ownership stake of officers and directors decli nes significantly from the year before going public to ten years later . Median operating return on assets also declines from the year before the offering to the end of the first year of public trading, but perf ormance declines no further in ten years. In general, operating perfor mance both within one year of the offering and during the first ten ye ars of public trading is unrelated to ownership of officers and direct ors.