BOARD OF DIRECTORS AND THE PRICING OF INITIAL PUBLIC OFFERINGS (IPOS): DOES THE EXISTENCE OF A PROPERLY STRUCTURED BOARD MATTER? EVIDENCE FROM FRANCE

Anis Mnif
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Anis Mnif: High School of Commerce - FSS - Faculté des Sciences de Sfax - Université de Sfax - University of Sfax

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Abstract: The purpose of this study is to introduce the board of directors as a signal of firm quality to abate information asymmetry. This study is based on agency theory and signaling theory to suggest that the existence of properly structured board at the time of the IPO may signal high firm quality to potential investors. To do that, I examine the association between board of directors' characteristics (including board composition, board size, leadership structure (CEO duality) and existence of an audit committee) and underpricing of 133 Initial Public Offerings (IPOs) in France between 2000 and 2004. Empirical evidence suggests that there is a positive effect of board size on underpricing and a negative association between the proportion of independent directors and underpricing. However, CEO duality as well as existence of an audit committee have no significant impact on underpricing. Overall, these results are consistent with the assumption that board attributes may be used as a signal of firm quality.

Keywords: Board of directors; Signaling theory; Agency theory; Initial Public Offerings; Underpricing (search for similar items in EconPapers)
Date: 2009-05-27
Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-00459257
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Citations: View citations in EconPapers (3)

Published in La place de la dimension européenne dans la Comptabilité Contrôle Audit, May 2009, Strasbourg, France. pp.CD ROM

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