Board chair gender, glass ceiling, and IPO underpricing: Evidence from China

Abstract

This paper explores the relationship between board chair gender and IPO underpricing from the perspective of glass ceiling. By employing a large sample of IPOs in China, we find firms with female board chairs (FBCs) have less underpricing than those with male board chairs (MBCs), indicating that investors interpret FBC as a positive signal of IPO. This relationship holds after addressing potential endogeneity concerns by instrumental variable regressions and by propensity score matched sample tests. Further studies show this relationship is more pronounced for firms with more internal gender discrimination, more risk-taking, and CEO-chair duality. In addition, we find firms led by FBCs have better operating performance in post-IPO period, but there is no evidence that firms with FBCs are more conservative in financial reporting or risk-taking. The results suggest that the glass ceiling may create more competent female leaders and investors who bid on firms led by FBCs can benefit from post-IPO operating performance. This paper extends research on underlying factors of IPO underpricing and the impact of gender discrimination in corporate leadership, and has implications for gender structure optimization of top management and IPO pricing efficiency.