tailieunhanh - Independent directors and the long-run performance of IPOs

The Securities and Futures Bureau (SFB) of Taiwan prescribes that firms applying for an initial listing after February 2002 must have at least two seats of independent directors (IDs) on the board. Under the SFB 2002 rules, this paper investigates the effect of such governance reforms in ID requirement on the long-run performance of IPOs. Our results, based on 494 IPOs between 1999 and 2005, find that though IPOs typically underperform in the post-issue period, firms after 2002 perform better than those before 2002. Moreover, firms with IDs also experience less negative stock performance than those without IDs. The results further suggest a positive association between the proportion of IDs on corporate boards and post-listing stock performance for IPOs after 2002. | Journal of Applied Finance Banking 2011 137-161 ISSN 1792-6580 print version 1792-6599 online International Scientific Press 2011 Independent Directors and the Long-run Performance of IPOs Tsai-Ling Liao1 Min-Teh Yu2 and Chih-Jen Huang3 Abstract The Securities and Futures Bureau SFB of Taiwan prescribes that firms applying for an initial listing after February 2002 must have at least two seats of independent directors IDs on the board. Under the SFB 2002 rules this paper investigates the effect of such governance reforms in ID requirement on the long-run performance of IPOs. Our results based on 494 IPOs between 1999 and 2005 find that though IPOs typically underperform in the post-issue period firms after 2002 perform better than those before 2002. Moreover firms with IDs also experience less negative stock performance than those without IDs. The results further suggest a positive association between the proportion of IDs on corporate boards and post-listing stock performance for IPOs after 2002. JEL classification numbers G14 M41 1 Department of Finance Providence University Taichung 433 Taiwan e-mail tlliao@. 2 Department of Finance National Taiwan University Taipei 106 Taiwan e-mail mtyu@. 3 Department of Finance Providence University Taichung 433 Taiwan e-mail cjh@. Article Info Revised November 19 2011. Published online December 30 2011 138 Independent Directors and the Long-run Performance of IPOs Keywords Corporate governance independent directors initial public offerings 1 Introduction Countries around the world have been amending their legal systems and stock exchange listing requirements to reform corporate governance as well as develop new codes of best practices. The recent corporate scandals such as WorldCom and Enron highlight the need for corporate governance reform at a global level. For example the Sarbanes-Oxley Act of 2002 and recently modified exchange listing requirements in the . mandate an increased

• Đầu tư Chứng khoán
• Corporate governance
• Independent directors
• Initial public offerings
• Long run performance of IPOs
• IPOs typically underperform