Events at the School of Accounting and Commercial Law
Listed below are forthcoming events either hosted by the School of Accounting and Commercial Law; or the Centre for Accounting, Governance and Taxation Research; or the Chair in Public Finance.
IPO firm performance and its link with board office gender, family-ties and other demographics - Professor Paul McGuinness (The Chinese University of Hong Kong)
Date: 5 August 2016
Time: 9.30 am
Venue: RWW 129
Issues of social justice underlie the clamour for greater gender balance in top-management. The present study reveals that pursuit of such social justice is also value-enhancing in relation to the longer-run performance if IPO stocks, especially where female board members are unencumbered by family-connection with other directors. This study examines the economic benefits of board gender diversity for state- and privately-controlled firms in Hong King IPO market. While the overwhelming majority of non-state firms are family-controlled, clear distinction exists between those that accommodate family-connected board members and those that do not. This issue allows for a finer-grained assessment of family influence on firm performance.
More resilient post-IPO stock returns arise in (1) privately-controlled firms without family-connected board members and in (2) state-run entities. Gender diversity serves as a positive, but only when female director presence is untrammelled by family-ties. Examination of financial performance (return-on-assets and sales-on-assets) offers further confirmation of this effect. In contrast, gender diversity bears little connection with IPO underpricing.
My analysis also identifies important IPO firm board demographics and attributes. Gender board diversity appears far more common in non-state Chinese firms. In comparison with state-backed issuers, privately-controlled firms possess younger boards, accommodate a broader mix of nationalities but are more-inclined to unify CEO and chair positions. Board duality, the fraction of independent directors and directors’ age and nationality exhibit little to no association with initial and after-market stock returns. In prescriptive terms, minority investors gain from the inclusion of female directors, especially when IPO firm members are unencumbered by family-ties. The present study therefore adds to the clarion of calls for greater female board presence.