Underpricing, board structure, and ownership: An empirical examination of Indonesian IPO firms

Darmadi, S; Gunawan, R

Underpricing, board structure, and ownership: An empirical examination of Indonesian IPO firms

Darmadi, S

Gunawan, R

Permalink

Publisher:: Emerald
Publication Type:: Journal Article
Citation:: Managerial Finance, 2013, 39, (2), pp. 181-200
Issue Date:: 2013-01-11

Closed Access

	Filename	Description	Size
	Paper MF.pdf	Published version	125.91 kB	Adobe PDF	View/Open

Copyright Clearance Process

Recently Added
In Progress
Closed Access

This item is closed access and not available.

Full metadata record

Field	Value	Language
dc.contributor.author	Darmadi, S https://orcid.org/0000-0002-7705-2672
dc.contributor.author	Gunawan, R
dc.date.accessioned	2021-09-16T11:22:52Z
dc.date.available	2021-09-16T11:22:52Z
dc.date.issued	2013-01-11
dc.identifier.citation	Managerial Finance, 2013, 39, (2), pp. 181-200
dc.identifier.issn	0307-4358
dc.identifier.issn	1758-7743
dc.identifier.uri	http://hdl.handle.net/10453/150603
dc.description.abstract	Purpose – The purpose of this paper is to examine whether and how underpricing is associated with board structure and corporate ownership among firms conducting initial public offerings (IPOs) in the Indonesian equity market. Design/methodology/approach – To capture the most recent development, the sample comprises 101 firms conducting IPOs in Indonesia's primary equity market in the period of 2003-2011. The explanatory variables consist of board size, board independence, ownership concentration, and institutional ownership. In further analysis, the authors perform regressions considering three types of the controlling shareholder, namely families, foreign entities, and the government. Findings – Providing some support for signaling theory, it is found that board independence is positively related to the level of underpricing. Further, this study provides evidence that the level of underpricing is negatively associated with both board size and institutional ownership, indicating that these two governance mechanisms play important roles in mitigating information asymmetry between the issuer and potential investors. Ownership concentration is insignificant in explaining the first-day returns. When the type of corporate control is taken into account, it is revealed that government-controlled companies tend to experience higher underpricing. Originality/value – This paper contributes to the IPO underpricing literature since the influence of corporate governance mechanisms on initial returns is relatively under-researched, particularly within the context of emerging markets.
dc.language	en
dc.publisher	Emerald
dc.relation.ispartof	Managerial Finance
dc.relation.isbasedon	10.1108/03074351311294016
dc.rights	info:eu-repo/semantics/closedAccess
dc.subject	1502 Banking, Finance and Investment
dc.title	Underpricing, board structure, and ownership: An empirical examination of Indonesian IPO firms
dc.type	Journal Article
utslib.citation.volume	39
utslib.for	1502 Banking, Finance and Investment
pubs.organisational-group	/University of Technology Sydney
pubs.organisational-group	/University of Technology Sydney/Faculty of Business
pubs.organisational-group	/University of Technology Sydney/Faculty of Business/Accounting Discipline
utslib.copyright.status	closed_access	*
dc.date.updated	2021-09-16T11:22:51Z
pubs.issue	2
pubs.publication-status	Published
pubs.volume	39
utslib.citation.issue	2

Abstract:

Purpose – The purpose of this paper is to examine whether and how underpricing is associated with board structure and corporate ownership among firms conducting initial public offerings (IPOs) in the Indonesian equity market. Design/methodology/approach – To capture the most recent development, the sample comprises 101 firms conducting IPOs in Indonesia's primary equity market in the period of 2003-2011. The explanatory variables consist of board size, board independence, ownership concentration, and institutional ownership. In further analysis, the authors perform regressions considering three types of the controlling shareholder, namely families, foreign entities, and the government. Findings – Providing some support for signaling theory, it is found that board independence is positively related to the level of underpricing. Further, this study provides evidence that the level of underpricing is negatively associated with both board size and institutional ownership, indicating that these two governance mechanisms play important roles in mitigating information asymmetry between the issuer and potential investors. Ownership concentration is insignificant in explaining the first-day returns. When the type of corporate control is taken into account, it is revealed that government-controlled companies tend to experience higher underpricing. Originality/value – This paper contributes to the IPO underpricing literature since the influence of corporate governance mechanisms on initial returns is relatively under-researched, particularly within the context of emerging markets.

Please use this identifier to cite or link to this item:

http://hdl.handle.net/10453/150603