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.
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Volume (Year): 21 (2012)
Issue (Month): C ()
|Contact details of provider:|| Web page: http://www.elsevier.com/locate/inca/620166|
References listed on IDEAS
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.:
- Jensen, Michael C. & Meckling, William H., 1976. "Theory of the firm: Managerial behavior, agency costs and ownership structure," Journal of Financial Economics, Elsevier, vol. 3(4), pages 305-360, October.
- Anderson, Ronald C. & Mansi, Sattar A. & Reeb, David M., 2003. "Founding family ownership and the agency cost of debt," Journal of Financial Economics, Elsevier, vol. 68(2), pages 263-285, May.
- Rafael La Porta & Florencio Lopez-de-Silanes & Andrei Shleifer, 2007.
"The Economic Consequences of Legal Origins,"
NBER Working Papers
13608, National Bureau of Economic Research, Inc.
- Kaserer, Christoph & Moldenhauer, Benjamin, 2006.
"Insider ownership and corporate performance: evidence from Germany,"
CEFS Working Paper Series
2005-01, Technische Universität München (TUM), Center for Entrepreneurial and Financial Studies (CEFS).
- Christoph Kaserer & Benjamin Moldenhauer, 2008. "Insider ownership and corporate performance: evidence from Germany," Review of Managerial Science, Springer, vol. 2(1), pages 1-35, March.
- Michael C. Jensen, 2010.
"The Modern Industrial Revolution, Exit, and the Failure of Internal Control Systems,"
Journal of Applied Corporate Finance,
Morgan Stanley, vol. 22(1), pages 43-58.
- Michael C. Jensen, 1994. "The Modern Industrial Revolution, Exit, And The Failure Of Internal Control Systems," Journal of Applied Corporate Finance, Morgan Stanley, vol. 6(4), pages 4-23.
- Jensen, Michael C, 1993. " The Modern Industrial Revolution, Exit, and the Failure of Internal Control Systems," Journal of Finance, American Finance Association, vol. 48(3), pages 831-880, July.
- Andrew West, 2006. "Theorising South Africaâ€™s Corporate Governance," Journal of Business Ethics, Springer, vol. 68(4), pages 433-448, November.
- Alon Brav & Paul A. Gompers, 2003. "The Role of Lockups in Initial Public Offerings," Review of Financial Studies, Society for Financial Studies, vol. 16(1), pages 1-29.
- Stuart Turley & Mahbub Zaman, 2004. "The Corporate Governance Effects of Audit Committees," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 8(3), pages 305-332, 06.
- Boubakri, Narjess & Hamza, Olfa, 2007. "The dynamics of privatization, the legal environment and stock market development," International Review of Financial Analysis, Elsevier, vol. 16(4), pages 304-331.
- Ben Naceur, Samy & Ghazouani, Samir & Omran, Mohammed, 2007. "The performance of newly privatized firms in selected MENA countries: The role of ownership structure, governance and liberalization policies," International Review of Financial Analysis, Elsevier, vol. 16(4), pages 332-353.
- Kaufmann, Daniel & Kraay, Aart & Mastruzzi, Massimo, 2008.
"Governance matters VII : aggregate and individual governance indicators 1996-2007,"
Policy Research Working Paper Series
4654, The World Bank.
- Kaufmann, Daniel & Kraay, Aart & Mastruzzi, Massimo, 2007. "Governance Matters VI: Aggregate and Individual Governance Indicators, 1996-2006," Policy Research Working Paper Series 4280, The World Bank.
- Kaufmann, Daniel & Kraay, Aart & Mastruzzi, Massimo, 2009. "Governance matters VIII : aggregate and individual governance indicators 1996-2008," Policy Research Working Paper Series 4978, The World Bank.
- Ross Levine, 2005.
"Law, Endowments, and Property Rights,"
NBER Working Papers
11502, National Bureau of Economic Research, Inc.
- Oliver E. Williamson, 2000. "The New Institutional Economics: Taking Stock, Looking Ahead," Journal of Economic Literature, American Economic Association, vol. 38(3), pages 595-613, September.
- Lauren Cohen & Andrea Frazzini & Christopher Malloy, 2008.
"The Small World of Investing: Board Connections and Mutual Fund Returns,"
Journal of Political Economy,
University of Chicago Press, vol. 116(5), pages 951-979, October.
- Lauren Cohen & Andrea Frazzini & Christopher Malloy, 2007. "The Small World of Investing: Board Connections and Mutual Fund Returns," NBER Working Papers 13121, National Bureau of Economic Research, Inc.
- Maureen O'Hara, 2003. "Presidential Address: Liquidity and Price Discovery," Journal of Finance, American Finance Association, vol. 58(4), pages 1335-1354, 08.
- Hearn, Bruce, 2011. "The performance and the effects of family control in North African IPOs," International Review of Financial Analysis, Elsevier, vol. 20(3), pages 140-151, June.
- Anil Shivdasani & David Yermack, 1999.
"CEO Involvement in the Selection of New Board Members: An Empirical Analysis,"
Journal of Finance,
American Finance Association, vol. 54(5), pages 1829-1853, October.
- Anil Shivdasani & David Yermack, 1998. "CEO Involvement in the Selection of New Board Members: An Empirical Analysis," New York University, Leonard N. Stern School Finance Department Working Paper Seires 98-059, New York University, Leonard N. Stern School of Business-.
- Keith Jefferis & Graham Smith, 2005. "The Changing Efficiency Of African Stock Markets," South African Journal of Economics, Economic Society of South Africa, vol. 73(1), pages 54-67, 03.
- Downes, David H & Heinkel, Robert, 1982. " Signaling and the Valuation of Unseasoned New Issues," Journal of Finance, American Finance Association, vol. 37(1), pages 1-10, March.
- Bruce Hearn & Jenifer Piesse, 2010. "Modelling size and illiquidity in West African equity markets," Applied Financial Economics, Taylor & Francis Journals, vol. 20(13), pages 1011-1030.
- Benjamin E. Hermalin & Michael S. Weisbach, 2001.
"Boards of Directors as an Endogenously Determined Institution: A Survey of the Economic Literature,"
NBER Working Papers
8161, National Bureau of Economic Research, Inc.
- Benjamin E. Hermalin & Michael S. Weisbach, 2003. "Boards of directors as an endogenously determined institution: a survey of the economic literature," Economic Policy Review, Federal Reserve Bank of New York, issue Apr, pages 7-26.
- Lavelle, Kathryn C., 2001. "Architecture of Equity Markets: The Abidjan Regional Bourse," International Organization, Cambridge University Press, vol. 55(03), pages 717-742, June.
- Marc G Quintyn & Michael W Taylor, 2007. "Building Supervisory Structures in Sub-Saharan Africa; An Analytical Framework," IMF Working Papers 07/18, International Monetary Fund.
- Jonas Hjort, 2010. "Pre-colonial culture, post-colonial economic success? The Tswana and the African economic miracle," Economic History Review, Economic History Society, vol. 63(3), pages 688-709, 08.
When requesting a correction, please mention this item's handle: RePEc:eee:finana:v:21:y:2012:i:c:p:33-44. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Shamier, Wendy)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.