Governing board interlocks: As an indicator of an IPO

Abstract

Using comprehensive data of Japanese firms, including small-sized and unlisted firms, this paper empirically analyzes how a governing board composition impacts initial public offerings (IPOs). The results show that board size, interlocks with other firms, and interlocks with other listed firms are all positively related to the probability of an IPO. They imply that a firm’s intention to conduct an IPO can be estimated by the size and interlocks, and that knowledge diffusion of an IPO occurs among firms.