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Corporate governance, insider ownership and operating performance of Australian initial public offerings

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  • Maria C. A. Balatbat
  • Stephen L. Taylor
  • Terry S. Walter

Abstract

We examine ownership structures and corporate governance attributes of 313 Australian initial public offerings (IPOs) between 1976 and 1993 and their relation with up to 5 years of post-listing operating performance, adjusted for similar (non-IPO) firms. Consistent with prior share price-based evidence, we find that the operating performance of Australian IPOs typically deteriorates over the first 4 post-listing years. Any evidence of a positive association between insider ownership and firm performance is confined to the fourth and fifth years after the IPO. Evidence of a positive relation between institutional ownership and performance is restricted to the latter part of our 5-year post-listing window. Board composition (i.e. outsider versus insider control) is not associated with operating performance, although there is some evidence that independent board leadership is associated with better operating performance. Copyright (c) 2004 Accounting and Finance Association of Australia and New Zealand.

Suggested Citation

  • Maria C. A. Balatbat & Stephen L. Taylor & Terry S. Walter, 2004. "Corporate governance, insider ownership and operating performance of Australian initial public offerings," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 44(3), pages 299-328.
  • Handle: RePEc:bla:acctfi:v:44:y:2004:i:3:p:299-328
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    References listed on IDEAS

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    1. Weisbach, Michael S., 1988. "Outside directors and CEO turnover," Journal of Financial Economics, Elsevier, vol. 20(1-2), pages 431-460, January.
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    Cited by:

    1. Nguyen, Tuan & Locke, Stuart & Reddy, Krishna, 2015. "Ownership concentration and corporate performance from a dynamic perspective: Does national governance quality matter?," International Review of Financial Analysis, Elsevier, vol. 41(C), pages 148-161.
    2. Alanazi Ahmed & Liu Benjamin & Forster John, 2011. "Saudi Arabian IPOs and Privatized Firms Profitability," Review of Middle East Economics and Finance, De Gruyter, vol. 7(1), pages 67-90, May.
    3. Nguyen, Tuan & Locke, Stuart & Reddy, Krishna, 2015. "Does boardroom gender diversity matter? Evidence from a transitional economy," International Review of Economics & Finance, Elsevier, vol. 37(C), pages 184-202.
    4. McGilvery, Andrew & Faff, Robert & Pathan, Shams, 2012. "Competitive valuation effects of Australian IPOs," International Review of Financial Analysis, Elsevier, vol. 24(C), pages 74-83.
    5. Philip Brown & Andrew Ferguson & Kate Stone, 2008. "Share Purchase Plans in Australia: Issuer Characteristics and Valuation Implications," Australian Journal of Management, Australian School of Business, vol. 33(2), pages 307-332, December.
    6. Ming-Feng Hsu & Shiow-Ying Wen, 2015. "The Roles of Institutional Investors and Insiders in Earnings Management around Initial Public Offering Firms in Taiwan," International Journal of Economics and Financial Issues, Econjournals, vol. 5(2), pages 340-353.
    7. Qureshi, Salman Ali & Rehman, Kashif ur & Hunjra, Ahmed Imran, 2012. "Factors Affecting Investment Decision Making of Equity Fund Managers," MPRA Paper 60783, University Library of Munich, Germany.
    8. repec:pje:journl:article27winviii is not listed on IDEAS
    9. Andriansyah, Andriansyah & Messinis, George, 2016. "Intended use of IPO proceeds and firm performance: A quantile regression approach," Pacific-Basin Finance Journal, Elsevier, vol. 36(C), pages 14-30.
    10. Chowdhury, Biplob & Dungey, Mardi & Pham, Thu Phuong, 2014. "The impact of post-IPO changes in corporate governance mechanisms on firm performance: evidence from young Australian firms," Working Papers 2014-11, University of Tasmania, Tasmanian School of Business and Economics, revised 24 Sep 2014.
    11. Yi Wang & Judith Oliver, 2009. "Board composition and firm performance variance: Australian evidence," Accounting Research Journal, Emerald Group Publishing, vol. 22(2), pages 196-212, September.
    12. Nguyen, Tuan & Locke, Stuart & Reddy, Krishna, 2014. "A dynamic estimation of governance structures and financial performance for Singaporean companies," Economic Modelling, Elsevier, vol. 40(C), pages 1-11.
    13. Shan, Yuan George, 2015. "Value relevance, earnings management and corporate governance in China," Emerging Markets Review, Elsevier, vol. 23(C), pages 186-207.
    14. Ahmad-Zaluki, Nurwati A. & Campbell, Kevin & Goodacre, Alan, 2011. "Earnings management in Malaysian IPOs: The East Asian crisis, ownership control, and post-IPO performance," The International Journal of Accounting, Elsevier, vol. 46(2), pages 111-137, June.
    15. repec:eee:jocaae:v:8:y:2012:i:1:p:1-22 is not listed on IDEAS

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