The contrasting effects of board composition and structure on IPO firm underpricing in a developing context
The contrasting effects of board composition and structure on IPO firm underpricing in a developing context
This study investigates the impact of board governance features and the presence of foreign, indigenous high society executives and board diversity on levels of IPO underpricing in a unique sample of 62 Initial Primary Offerings (IPOs) from across Sub Saharan African (SSA), excluding South Africa. I find evidence that greater numbers of foreign executives increase underpricing while higher numbers of indigenous high society directors have an opposing effect. Increasing board ethnic and nationality diversity together with the establishment of nominally independent board monitoring and oversight committees are associated with higher underpricing implying that standard international governance best practice is inappropriate in a developing region dominated by narrow political economies underscored by underdeveloped formal institutions with minimal investor protection.
Africa, Agency theory, Corporate governance, IPO, Underpricing
33-44
Hearn, Bruce
45dccea3-9631-4e5e-914c-385896674dc2
January 2012
Hearn, Bruce
45dccea3-9631-4e5e-914c-385896674dc2
Hearn, Bruce
(2012)
The contrasting effects of board composition and structure on IPO firm underpricing in a developing context.
International Review of Financial Analysis, 21, .
(doi:10.1016/j.irfa.2011.09.004).
Abstract
This study investigates the impact of board governance features and the presence of foreign, indigenous high society executives and board diversity on levels of IPO underpricing in a unique sample of 62 Initial Primary Offerings (IPOs) from across Sub Saharan African (SSA), excluding South Africa. I find evidence that greater numbers of foreign executives increase underpricing while higher numbers of indigenous high society directors have an opposing effect. Increasing board ethnic and nationality diversity together with the establishment of nominally independent board monitoring and oversight committees are associated with higher underpricing implying that standard international governance best practice is inappropriate in a developing region dominated by narrow political economies underscored by underdeveloped formal institutions with minimal investor protection.
This record has no associated files available for download.
More information
Accepted/In Press date: 27 September 2011
e-pub ahead of print date: 2 October 2011
Published date: January 2012
Keywords:
Africa, Agency theory, Corporate governance, IPO, Underpricing
Identifiers
Local EPrints ID: 423326
URI: http://eprints.soton.ac.uk/id/eprint/423326
ISSN: 1057-5219
PURE UUID: 88fe027b-46c7-437f-bffb-9040097a1425
Catalogue record
Date deposited: 20 Sep 2018 16:30
Last modified: 16 Mar 2024 04:37
Export record
Altmetrics
Download statistics
Downloads from ePrints over the past year. Other digital versions may also be available to download e.g. from the publisher's website.
View more statistics
