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Director networks and initial public offerings

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  • Feng, Yi
  • Song, Keke
  • Tian, Yisong S.

Abstract

We investigate how director networks impact IPO characteristics and find that firms with better-connected directors have higher IPO market valuation, more positive offer price revisions, higher first-day returns, more pre-IPO media coverage, and superior post-IPO stock performance. Director networks are beneficial to the share offering because corporate directors help facilitate information exchange with prospective investors, attract their attention to the IPO, and maintain and grow their interest after the IPO.

Suggested Citation

  • Feng, Yi & Song, Keke & Tian, Yisong S., 2019. "Director networks and initial public offerings," Journal of Banking & Finance, Elsevier, vol. 106(C), pages 246-264.
    • Handle: RePEc:eee:jbfina:v:106:y:2019:i:c:p:246-264
    DOI: 10.1016/j.jbankfin.2019.07.001
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    More about this item

    Keywords

    Director networks; Network centrality; IPO underpricing; Offer price revision; IPO valuation; Investor attention; Pre-IPO media coverage; Post-IPO stock performance;
    All these keywords.

    JEL classification:

    • G3 - Financial Economics - - Corporate Finance and Governance
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation

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