Can female directors affect IPO withdrawal risk?

Fouad Jamaani

Business Horizons, 2025, vol. 68, issue 3, 361-383

Abstract: This article fills a gap in the gender diversity and initial public offering (IPO) withdrawal literature by examining how female directors on boards of management at the time of offering affect withdrawal risk. The study employs a global dataset encompassing 33,535 withdrawn and completed IPOs between January 1995 and December 2019 in 22 diverse country settings with varying economic developments, legal systems, and cultural values. I utilize a cross-sectional probit estimate approach. I identify compelling evidence that a 10% increase in women’s presence on boards reduced worldwide IPO withdrawals by up to 49%. Employing female directors prior to an IPO offers a corporate governance signaling approach for IPO owners that reduces information asymmetry among IPO investors, minimizing the likelihood of IPO withdrawal. Investors in the primary market now have reliable information suggesting that investing in IPO businesses that encourage gender diversity ensures successful listing of IPOs and effective investment decisions. This is because investors’ funds placed in IPOs that are expected to be withdrawn are eventually anticipated to be refunded. If investors are required to maintain their capital in an IPO business that could, at a certain point, be withdrawn from the market, this type of investment is unquestionably worthless. To the best of the scientific community’s understanding, this is the first time that solid proof of a significant reverse relationship between the presence of female directors and withdrawal risk for IPO enterprises has been uncovered. My findings, which demonstrate the critical importance of promoting gender diversity in IPO businesses, may be useful to those organizations that regulate the primary market. In the IPO market, female directors help reduce the risk of withdrawal, which may encourage local private equity owners to float their enterprises on the primary market, thereby enhancing economic growth.

Keywords: IPO withdrawal risk; Female directors; Female board members; Gender diversity; Signaling theory; Information asymmetry (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:bushor:v:68:y:2025:i:3:p:361-383

DOI: 10.1016/j.bushor.2025.02.001

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