'Going Public with Good Governance': Board Selection and Share Ownership in UK IPO Firms
41 Pages Posted: 13 May 2002
Date Written: April 2002
Abstract
Combining the agency perspective, entrepreneurship and upper echelon research, this paper examines inter-links between executive power, board selection strategy and share ownership in a sample of initial public offerings (IPOs). It argues that the IPO process presents a unique combination of agency relationships between the firm's executive and non-executive directors, and outside investors. It shows that, in line with the predictions of a proposed theoretical model, board independence, diversity and share ownership of non-executive directors are negatively associated with the experience and power of executive directors. Large-block share ownership is positively associated with board diversity. However, external investors, including venture capitalists, do not affect board independence and non-executives' interests.
Keywords: IPO; board selection; venture capital; large-block shareholders
JEL Classification: G14, G24, G30
Suggested Citation: Suggested Citation