Abstract
In this chapter, the aim was to provide an elucidation for the underestimation of initial public offerings (IPOs) pertaining to French family firms. This was initially done by examining the ownership and control of such firms before and after the IPO, as well as the corporate governance mechanisms implemented by the owners. The model encompasses the governance mechanisms employed by family companies during their issuance. However, remarkably, the authors discovered that, albeit at an exceptionally high level of statistical insignificance, nearly 9.8% of the IPO underestimation can be accounted for by governance mechanisms. They attribute this finding to the potential presence of short-term investors and speculators who exhibit greater sensitivity toward the alteration in cash flow rights resulting from the IPO, as opposed to the governance mechanisms established by family businesses. The objective was to explain the IPO underestimation through cognitive governance mechanisms, rather than offering a comprehensive explanation for the underestimation of family businesses in general.