Global Board Reforms and the Pricing of IPOs
Journal of Financial and Quantitative Analysis (JFQA), Forthcoming
63 Pages Posted: 30 Jul 2020 Last revised: 21 Jan 2021
Date Written: January 21, 2021
We document that global board reforms are associated with a significant reduction in IPO underpricing. The effect is amplified for IPOs with greater agency problems and mitigated for IPOs certified by reputable intermediaries, IPOs with greater disclosure specificity, and IPOs in countries with better shareholder protection and stringent financial reporting regulations. Furthermore, global board reforms have led to an improvement in the long-term market performance, proceeds, and subscription level of IPOs, and have enhanced board independence in the issuing firms. Our findings suggest that global board reforms have strengthened board oversight in the issuing firms, leading to less underpriced IPOs.
Keywords: Global board reforms; IPO underpricing; Corporate governance
JEL Classification: G15, G32, G34
Suggested Citation: Suggested Citation