Corporate Governance and Firm Value for Small and Medium Sized Ipos
Financial Markets and Portfolio Management, Vol. 18, No. 2, pp. 143-159, 2004
Posted: 12 Sep 2005
This paper proposes to include corporate governance characteristics in the explanation of underpricing at the time of IPOs. It shows that the investment banks and the issuers take the characteristics of the corporate board into account when valuing the issue, while investors adjust for the ownership structure in the aftermarket. Moreover, empirical tests provide some proofs about a simultaneous relation between the initial underpricing and the offer price-to-book, and suggest that price adjustment in the aftermarket includes the board characteristics as valued in the offer price.
JEL Classification: G0, G1
Suggested Citation: Suggested Citation