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The Board Structure and Performance in IPO Firms: Evidence from Stakeholder-Oriented Corporate Governance

Author

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  • Naoki Watanabel

    (Graduate School of Economics, Nagoya City University, Nagoya 4678501, Japan)

  • Shohei Yamauchi

    (Graduate School of Economics, Nagoya City University, Nagoya 4678501, Japan)

  • Hideaki Sakawa

    (Graduate School of Economics, Nagoya City University, Nagoya 4678501, Japan)

Abstract

This study investigates the internal mechanisms as an important factor for shareholders and stakeholders in initial public offering (IPO) firms with stakeholder-oriented corporate governance. Over the period of 2009–2016, we examine the role of independent directors in Japanese stakeholder-oriented corporate governance. According to previous research, the monitoring role of independent directors is strengthened in countries with a market-based financial system. Our empirical analyses show that independent directors do not effectively mitigate conflicts among shareholders such as IPO underpricing in a stakeholder-oriented corporate governance framework. Alternatively, accounting expertise may contribute to mitigating IPO underpricing in accordance with U.S. corporations. The participation of bank-affiliated directors in IPO firms further contributes to the mitigation of underpricing. Accordingly, these findings imply that bank ties through Horizontal Keiretsu’s bank-appointed directors are critical for mitigating conflicts among shareholders in IPO firms. These results imply that stakeholder-oriented corporate governance systems contribute to reducing conflicts among stakeholders.

Suggested Citation

  • Naoki Watanabel & Shohei Yamauchi & Hideaki Sakawa, 2022. "The Board Structure and Performance in IPO Firms: Evidence from Stakeholder-Oriented Corporate Governance," Sustainability, MDPI, vol. 14(13), pages 1-15, July.
    • Handle: RePEc:gam:jsusta:v:14:y:2022:i:13:p:8078-:d:854125
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