CEO’s outsized impact on IPO process and its price performance: A study on the Indian IPOs

Abstract

This study article aims to provide fresh insights and reaffirm the impact of established corporate governance aspects pertaining to the executives’ characteristics on the listing-day performance of Indian IPO firms, as assessed by underpricing, a performance indicator unique to the IPO context. The period taken under study was 2006 to 2016 and a sample of total 347 IPOs were taken for the study and the data was collected from Nation stock exchange (NSE). The study finds that there has been recently a reasonably high level of underpricing in the Indian IPO market. Results obtained from the regression analysis show that dual leadership structure are negatively and significantly associated with the extent of IPO underpricing. This study also proposes that the male CEOs in India have gained more working experience in the market that leads to IPO underpricing. CEOs with higher education levels and work experience lead to lower IPO underpricing as they understand the importance of corporate governance mechanism and practice. Findings show that the subscription ratio and the market conditions act as information signals for Indian IPO firms having a significant and negative relation with listing-day initial excess returns.