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Jillali, S. A., & Belkasseh, M. (2022). Financial Performance of Initial Public Offerings: Exploratory Study. Archives of Business Research, 10(03). 171-

190.

URL: http://dx.doi.org/10.14738/abr.103.12032

the ardor, prudence and vigilance of the owners which can also involve a lot of expenses for the

company. Therefore, especially for a joint-stock company, this separation of ownership and

management is harmful and against the interests of shareholders (Berle & Means, 1932). When

the ownership is too dispersed among the shareholders, their minority shares give them an

automatically weak power of control to the advantage of the managers, which allows the latters

to behave in a discretionary manner; for the benefit of their personal interests and to the

detriment of the objectives of maximizing the value of the company and the wealth of the

shareholders. According to Williamson (1975), the interest of managers lies in meeting their

needs in terms of salary, prestige, power and security, their needs obviously generate costs for

the company which has nothing to do with the objectives of maximization of value and wealth

mentioned above.

For adjustments, Berle & Means (1932) and Jensen & Meckling (1976) concluded that the

interests of shareholders should be protected through agency costs which may correspond to

monitoring costs borne by the principal (shareholder) to limit the agent's opportunistic

behavior (in this case the manager) and the costs incurred by the principal to guide the agent's

behavior, it can also be an opportunity cost which is likened to the loss of utility suffered by the

principal as a result of a divergence of interest with the agent. In this sense, depending to a large

extent on the conditions to which shareholders are subject to carry out a capital opening

operation, La Porta, Lopez-de-Silanes, Shleifer and Vishny (1997) intervened to indicate the

advantage of an IPO in the reduction of agency costs. Per them, the obligation of communication

and information is an obstacle for managers, as well as the listed company benefits from a

continuous evaluation and valuation by experts of the stock market which limits the possibility

of making additional gains and profits in a discreet manner when the company loses its value.

In this case, the authors focusing on investor security confirmed the importance of legal rules

and their application to the size, extent, and breadth of capital markets. «A good legal

environment protects the potential financiers against expropriation by entrepreneurs, it raises

their willingness to surrender funds in exchange for securities, and hence expands the scope of

capital markets. » (La Porta et al., 1997, p. 1149).

Fadil (2010) has also evoked this topic through agency theory and the so-called "glass house".

The theory considers the financial market as a control mechanism for the leaders which would

encourage them to make strategic choices going in the sense of maximizing shareholder value.

With the limited freedom of managers vis-a-vis the conditions of authorities and regulatory

bodies of financial markets, the protection of shareholders and transparency of information

could be guaranteed (Jensen, 1991).

In an African Moroccan context, for Sassi (2016), there is a significant number of costs linked

to the IPO and which can even discourage especially small companies from resorting to capital

markets and deprive themselves of classic financial sources with the lowest cost. These are:

direct, related to legal costs, fees of the placing organism, and publicity of the operation; and

indirect, related to the loss of control of the company following the dilution of the capital, as

well as the effort and work of the management team to complete the transaction and launch the

financial communication. There are also the costs related to the stay on the stock market (the

commission for admission to the listing, the annual stay commission).