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Journal of Economics and Finance

, Volume 25, Issue 1, pp 100–114 | Cite as

Board ownership and IPO returns

  • Shawn D. Howton
  • Shelly W. Howton
  • Gerard T. Olson
Article

Abstract

This study examines the role of the board of directors for IPO pricing irregularities. Theory suggests that initial underpricing may be the result of asymmetric information and the long-run underperformance may be the result of managerial mismanagement of new funds due to agency conflicts. A strong board of directors can potentially reduce both asymmetric information and agency problems. We find that the structure of the board is related to IPO pricing anomalies. Initial returns are directly related to share ownership by insiders and the percentage of independent outsiders, and long-run returns are directly related to share ownership by insiders.

Keywords

Initial Public Offering Share Ownership Shareholder Wealth Board Variable Inside Ownership 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

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Copyright information

© Springer 2001

Authors and Affiliations

  • Shawn D. Howton
    • 1
  • Shelly W. Howton
    • 1
  • Gerard T. Olson
    • 1
  1. 1.Department of FinanceVillanova UniversityVillanova

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