The Impact of Corporate Governance Measures on the Performance of West African IPO Firms
35 Pages Posted: 20 Jun 2010 Last revised: 7 Aug 2011
Date Written: June 19, 2010
This paper examines the impact on underpricing and firm market value arising from IPO firms implementing a range of governance attributes such as the separation of CEO and Chairman roles, the founder ceding CEO position, establishment of committees and board size. It extends this by studying the determinants of CEO and director retained ownership and the relation between this and underpricing. Using a unique and comprehensive sample of 37 locally listed IPO firm’s from across West Africa I find evidence that not all universal governance mechanisms are optimal in the highly relationship-focussed business environment across the region. Furthermore I find evidence of a detrimental impact of higher levels of retained director ownership while the opposite is true in founder firms where higher levels of founder ownership actually reduce underpricing.
Keywords: IPO, Underpricing, Cost of Equity, West Africa, Agency Theory
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