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Board Of Directors And The Pricing Of Initial Public Offerings (Ipos): Does The Existence Of A Properly Structured Board Matter? Evidence From France

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  • Anis Mnif

    (High School of Commerce - Faculté des sciences de Sfax)

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    Abstract

    The purpose of this study is to introduce the board of directors as a signal of firm quality to abate information asymmetry. This study is based on agency theory and signaling theory to suggest that the existence of properly structured board at the time of the IPO may signal high firm quality to potential investors. To do that, I examine the association between board of directors' characteristics (including board composition, board size, leadership structure (CEO duality) and existence of an audit committee) and underpricing of 133 Initial Public Offerings (IPOs) in France between 2000 and 2004. Empirical evidence suggests that there is a positive effect of board size on underpricing and a negative association between the proportion of independent directors and underpricing. However, CEO duality as well as existence of an audit committee have no significant impact on underpricing. Overall, these results are consistent with the assumption that board attributes may be used as a signal of firm quality.

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    Bibliographic Info

    Paper provided by HAL in its series Post-Print with number halshs-00459257.

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    Date of creation: 2009
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    Publication status: Published - Presented, La place de la dimension européenne dans la Comptabilité Contrôle Audit, 2009, Strasbourg, France
    Handle: RePEc:hal:journl:halshs-00459257

    Note: View the original document on HAL open archive server: http://halshs.archives-ouvertes.fr/halshs-00459257/en/
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    Related research

    Keywords: Board of directors; Signaling theory; Agency theory; Initial Public Offerings; Underpricing;

    References

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    Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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    1. Randolph P. Beatty & Jay R. Ritter, . "Investment Banking, Reputation and the Underpricing of Initial Public Offerings," Rodney L. White Center for Financial Research Working Papers 02-85, Wharton School Rodney L. White Center for Financial Research.
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    19. Kamran Ahmed & Mahmud Hossain & Mike B. Adams, 2006. "The Effects of Board Composition and Board Size on the Informativeness of Annual Accounting Earnings," Corporate Governance: An International Review, Wiley Blackwell, vol. 14(5), pages 418-431, 09.
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