IPO underpricing and long run performance in Singapore: does governance matter?

James Kwan

Research output: ThesisDoctoral Thesis

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Abstract

[Truncated] This study employs a composite corporate governance index, specific corporate governance variables, and a full range of firm-specific variables to examine initial returns and long-run performance of IPOs in Singapore. It appears to be the first study to examine this combination of variables and to adopt both qualitative and quantitative approaches. An initial qualitative phase involves interviews with representatives from three major parties to an IPO transaction: issuers, underwriters, and investors. Their views are sought on the relative importance of corporate governance, appropriateness of particular items for the construction of a corporate governance index (CGI) and how IPO performance should be measured. The quantitative phase examines the extent to which the level of underpricing and long-run performance of the IPOs are associated with: (i) corporate governance attributes, (ii) whether the IPO is VC-backed and (iii) the lock-up period for the IPOs.

The qualitative phase reveals that interviewees see a positive relationship between corporate governance and IPO performance in the long-run, but not in the short-term. In addition, they feel that IPOs producing better results have the following governance attributes: larger board size with a good mix of skills and experience among the independent directors, a dual leadership structure, a higher level of equity ownership by the directors after listing, backed by venture capitalists, and a longer lock-up period. Some of the interviewees do not believe IPO performance is necessarily related to which board the IPO is listed on – the Main or SESDAQ, though some do.

Original languageEnglish
QualificationDoctor of Philosophy
Publication statusUnpublished - 2014

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