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The Effects of Information Disclosure and Board Independence on IPO Discount

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  • Salim Chahine
  • Igor Filatotchev

Abstract

This paper examines the effect of strategic information disclosure and corporate governance on the stock market performance of initial public offering (IPO) firms in France. It argues that information disclosure and board independence mitigate agency problems between the IPO firm and investors, thus reducing the IPO discount defined as the difference between the offer price and the intrinsic value of the firm. However, extensive disclosure may damage the firm's competitive advantage and lead to a curvilinear (an inverted U‐shape) relationship between information disclosure and the IPO discount. Further analysis suggests that it is not necessarily the quantity of information, but rather the type of information, that causes the IPO discount to increase with the amount of disclosure.

Suggested Citation

  • Salim Chahine & Igor Filatotchev, 2008. "The Effects of Information Disclosure and Board Independence on IPO Discount," Journal of Small Business Management, Taylor & Francis Journals, vol. 46(2), pages 219-241, April.
    • Handle: RePEc:taf:ujbmxx:v:46:y:2008:i:2:p:219-241
    DOI: 10.1111/j.1540-627X.2008.00241.x
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    Cited by:

    1. Hussain, Tanveer & Loureiro, Gilberto, 2022. "Portability of firm corporate governance in mergers and acquisitions," Research in International Business and Finance, Elsevier, vol. 63(C).
    2. Huang, Huiqin & Wang, Chenglong & Yu, Wei & Zhu, Keying, 2023. "Does powerful executive holding a dual post as the board secretary reduce nonpunitive regulation?," International Review of Financial Analysis, Elsevier, vol. 89(C).
    3. Waqas Mehmood & Rasidah Mohd-Rashid & Yasir Abdullah & Ataul Karim Patwary & Attia Aman-Ullah, 2023. "Inclusive mapping of initial public offerings: a bibliometric and literature review study," Quality & Quantity: International Journal of Methodology, Springer, vol. 57(1), pages 655-700, February.
    4. Yasir Shahab & Ammar Ali Gull & Asad Ali Rind & Aitzaz Ahsan Alias Sarang & Tanveer Ahsan, 2022. "Do corporate governance mechanisms curb the anti-environmental behavior of firms worldwide? An illustration through waste management," Post-Print hal-03602986, HAL.
    5. Nischay Arora & Balwinder Singh, 2023. "Do Female Directors Signal Indian SME IPOs Quality? Evidence From a Quantile Regression Approach," Global Business Review, International Management Institute, vol. 24(1), pages 185-205, February.
    6. Tahir Akhtar, 2024. "Blockchain Technology: the Beginning of a New Era in Reforming Corporate Governance Mechanisms," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 15(1), pages 3059-3084, March.
    7. Katti, Supriya & Lawrence, Edward R. & Raithatha, Mehul, 2023. "Risk disclosure in IPO advertisement and the quality of the firm," Journal of Financial Markets, Elsevier, vol. 64(C).
    8. Musson, Anne & Rousseliere, Damien, 2016. "De quoi l’agriculture écologiquement intensive est-elle le nom ? Une analyse du changement institutionnel à travers l’approche discursive," Économie rurale, French Society of Rural Economics (SFER Société Française d'Economie Rurale), vol. 356(November-).
    9. Wang, Tong & Zhao, Sheng & Zhou, Mengqiu, 2022. "Does soft information in expert ratings curb information asymmetry? Evidence from crowdfunding and early transaction phases of Initial Coin offerings," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 81(C).

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