Director Experience and the Performance of IPOs: Evidence from Sweden

• Main Author: Anders Isaksson
• Format: Article
• Language: English
• Published: University of Wollongong 2014-03-01
• Series: Australasian Accounting, Business and Finance Journal
• Subjects: Initial Public Offerings; Corporate Governance; Underpricing
• Online Access: http://ro.uow.edu.au/aabfj/vol8/iss1/2

private to public. In this paper the experience of directors is examined to determine the extent of the role they play in ensuring a successful listing. Unique data from 122 IPOs on the Swedish Stock Exchange have been examined in a search for the effect of director experience on aftermarket performance. Specific aspects of director experience within a board, such as interlocking directorships and average tenure, are connected to the underpricing of Swedish IPOs. Contrary to expectations, no statistically significant relationship was found between long-run aftermarket performance and director experience at the time of an IPO. This suggests that the previous experience of directors, as measured in earlier studies, is less relevant to long-term aftermarket performance in Sweden compared to other countries studied in the literature review. This emphasises the importance of examining different institutional contexts.