Abstract
Role of corporate governance indicators in IPO (Initial Public Offering) pricing is moderately researched area, however, a majority of these researches are found to be in context of other than Asian economies. Particularly, in context of Indian IPO market, only a few studies have been conducted in the past. Hence, the present study aspires to bridge this gap by examining the statistical significance of board-related corporate governance mechanisms in predicting the likelihood of IPO underpricing. This study is unique as it incorporates a new dimension of “board leadership” and examines the impact of having an independent director as the chairman of the board on IPO underpricing. Binary Logistic Regression Model is used to establish the relationship between IPO Listing gain/loss and board-related corporate governance mechanisms viz. participation of women directors on board, nature of board leadership and board independence.
Highlights
Market for initial public offerings is a well-researched area amongst the researchers’ community across the globe
The present study aspires to bridge this gap by examining the statistical significance of board-related corporate governance mechanisms in predicting the likelihood of IPO underpricing
Binary Logistic Regression Model is used to establish the relationship between IPO Listing gain/loss and board-related corporate governance mechanisms viz. participation of women directors on board, nature of board leadership and board independence
Summary
Market for initial public offerings is a well-researched area amongst the researchers’ community across the globe. Not many studies have been conducted to investigate the role of corporate governance mechanism in IPO underpricing, especially in context of Indian new issue market. The present study aspires to bridge this gap by examining the statistical significance of board-related corporate governance mechanisms in predicting the likelihood of IPO underpricing. Previous researches in this area have been limited to the study of strength and direction of association between board-related governance indicators and level of underpricing. This study uniquely contributes to extant literature by developing a model that predicts the likelihood of IPO underpricing based on the board related governance indicators of issuing firm at the time of public offering. The practical significance of these variables, is subject to further investigation based on larger sample size and varied variables
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