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

See all articles by Yangyang Chen

Yangyang Chen

City University of Hong Kong (CityUHK) - Department of Accountancy

Abhinav Goyal

University College Cork

Leon Zolotoy

University of Melbourne - Melbourne Business School

Date Written: January 21, 2021

Abstract

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

Chen, Yangyang and Goyal, Abhinav and Zolotoy, Leon, Global Board Reforms and the Pricing of IPOs (January 21, 2021). Journal of Financial and Quantitative Analysis (JFQA), Forthcoming, Available at SSRN: https://ssrn.com/abstract=3643239 or http://dx.doi.org/10.2139/ssrn.3643239

Yangyang Chen (Contact Author)

City University of Hong Kong (CityUHK) - Department of Accountancy ( email )

83 Tat Chee Avenue
Kowloon
Hong Kong
China

Abhinav Goyal

University College Cork ( email )

O'Rahilly Building
College Road
Cork
Ireland
+353 (0)21 490 2839 (Phone)

Leon Zolotoy

University of Melbourne - Melbourne Business School ( email )

200 Leicester Street
Carlton, Victoria 3053 3186
Australia

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