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Article

Does corporate governance affect the valuation of Spanish IPOs? The role of ownership structure and the board of directors

Spanish Journal of Finance and Accounting. 2018. Vol. 47. No. 2. P. 214-241.
Félix J. López-Iturriaga, Álvarez-Otero S.

We analyse the influence of the board of directors and ownership structure on the valuation of initial public offering (IPOs) in the Spanish capital market during the period 1998–2013. After controlling for other influences such as the auditor’s reputation, the underwriter’s reputation and the level of information asymmetry, our results lend strong support for the hypothesis of the influence exerted by ownership concentration over the level of IPO underpricing. Moreover, we find a nonlinear relationship between the proportion of shares in the IPO belonging to members of the board of directors and the level of underpricing. Other IPO and firm characteristics such as the size of the offer and its structure also prove to be statistically significant. Finally, we find that the market cycle influences the valuation of IPOs, as the relationship between the market return and the initial IPO return is positive and statistically significant.