Who leaves money on the table? The role of founder identity in Hong Kong

Yan-leung Cheung; Yunhao Dai; Zhiwei Ouyang; Weiqiang Tan

doi:10.1080/00036846.2017.1340577

Who leaves money on the table? The role of founder identity in Hong Kong

Yan-leung Cheung, Yunhao Dai^*, Zhiwei Ouyang, Weiqiang Tan

^*Corresponding author for this work

Research output: Contribution to journal › Journal article › peer-review

8 Citations (Scopus)

23 Downloads (Pure)

Abstract

This study investigates the effect of corporate governance factors on the underpricing of initial public offerings (IPOs) in Hong Kong, and the results show that this effect is significant. IPOs are categorized into four subgroups based on the role of the founder: (1) no-founder firms (companies with no specific founder), (2) pure-founder firms (companies whose founder is neither the company’s chairman of the board nor its CEO), (3) founder-chairman/CEO firms (companies whose founder is either the company’s chairman of the board or its CEO) and (4) founder-chairman-CEO firms (companies whose founder is the chairman and CEO). The results demonstrate a significant descending pattern for the underpricing level of the four subgroups, which can be explained by the varying incentive and behaviour mechanisms that result from the various founder identities.

Original language	English
Pages (from-to)	774-788
Number of pages	15
Journal	Applied Economics
Volume	50
Issue number	7
Early online date	19 Jun 2017
DOIs	https://doi.org/10.1080/00036846.2017.1340577
Publication status	Published - 7 Feb 2018

Scopus Subject Areas

Economics and Econometrics

User-Defined Keywords

board of directors
corporate governance
Family firms
Hong Kong
IPO underpricing

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10.1080/00036846.2017.1340577

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abstract = "This study investigates the effect of corporate governance factors on the underpricing of initial public offerings (IPOs) in Hong Kong, and the results show that this effect is significant. IPOs are categorized into four subgroups based on the role of the founder: (1) no-founder firms (companies with no specific founder), (2) pure-founder firms (companies whose founder is neither the company{\textquoteright}s chairman of the board nor its CEO), (3) founder-chairman/CEO firms (companies whose founder is either the company{\textquoteright}s chairman of the board or its CEO) and (4) founder-chairman-CEO firms (companies whose founder is the chairman and CEO). The results demonstrate a significant descending pattern for the underpricing level of the four subgroups, which can be explained by the varying incentive and behaviour mechanisms that result from the various founder identities.",

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note = "Funding Information: Dai acknowledges financial support from the China Postdoctoral Science Foundation (Grant No. 2016M592322), Tan acknowledges financial support from the Faculty Research Grant of Hong Kong Baptist University, and we also recognize the financial support from Research Centre of Low-carbon Economy for Guangzhou Region, Jinan University. We thank Wenming Wang, Yang Yi, Wenlan Zhang, and Wenrui Zhang, and the seminar participants at Huazhong University of Science and Technology and Hong Kong Baptist University for their constructive comments. Dai acknowledges financial support from the China Postdoctoral Science Foundation (Grant No. 2016M592322), Tan acknowledges financial support from the Faculty Research Grant of Hong Kong Baptist University, and we also recognize the financial support from Research Centre of Low-carbon Economy for Guangzhou Region, Jinan University.",

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PY - 2018/2/7

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N2 - This study investigates the effect of corporate governance factors on the underpricing of initial public offerings (IPOs) in Hong Kong, and the results show that this effect is significant. IPOs are categorized into four subgroups based on the role of the founder: (1) no-founder firms (companies with no specific founder), (2) pure-founder firms (companies whose founder is neither the company’s chairman of the board nor its CEO), (3) founder-chairman/CEO firms (companies whose founder is either the company’s chairman of the board or its CEO) and (4) founder-chairman-CEO firms (companies whose founder is the chairman and CEO). The results demonstrate a significant descending pattern for the underpricing level of the four subgroups, which can be explained by the varying incentive and behaviour mechanisms that result from the various founder identities.

AB - This study investigates the effect of corporate governance factors on the underpricing of initial public offerings (IPOs) in Hong Kong, and the results show that this effect is significant. IPOs are categorized into four subgroups based on the role of the founder: (1) no-founder firms (companies with no specific founder), (2) pure-founder firms (companies whose founder is neither the company’s chairman of the board nor its CEO), (3) founder-chairman/CEO firms (companies whose founder is either the company’s chairman of the board or its CEO) and (4) founder-chairman-CEO firms (companies whose founder is the chairman and CEO). The results demonstrate a significant descending pattern for the underpricing level of the four subgroups, which can be explained by the varying incentive and behaviour mechanisms that result from the various founder identities.

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Who leaves money on the table? The role of founder identity in Hong Kong

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