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This paper examines the determinants of firms’ ownership structure from a sample of corporate spinoffs. Spinoff transactions offer an interesting empirical design to study ownership structure because after the pro-rata distribution of shares from the new publicly traded unit firm to existing parent shareholders, both parent and unit firms have the exactly same ownership structure. By tracking the ownership structures of these two sets of firms that start at the same point on ownership structure at the time of spinoffs, I find that firms change their ownership structure to fit their firm characteristics over time. Spunoff firms are newly public firms so their ownership is more concentrated, while mature parent firms are more diverse and institutional-oriented. Results in this paper provide evidence on the determinants of firms’ ownership structures and their evolution over time.

finance; ownership; spinoffs