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Board Independence, Ownership Structure and the Valuation of IPOs in Continental Europe


  • Fabio Bertoni,

    Corresponding author
    • Address for correspondence: Fabio Bertoni, EMLYON Business School, Research Center on Entrepreneurial Finance (ReCEntFin), Department of Economics, Finance and Control, 23 Avenue Guy de Collongue, 69134 Ecully, France. E-mail:

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  • Michele Meoli,

  • Silvio Vismara


Manuscript Type


Research Question/Issue

We combine the value-creation and value-protection views of the board of directors to study the impact of board independence (BI) on the value of the firm at the time of its initial public offering (IPO).

Research Findings/Insights

We conduct our analysis on a sample of 969 firms that went public in France, Germany, and Italy between 1995 and 2011. We show that BI is a critical factor in the valuation of IPO firms. Our results support both the value-creation and value-protection roles of the board of directors. The relative importance of the two roles of the board varies over time, with value-creation (value-protection) dominating in IPOs of young (mature) companies.

Theoretical/Academic Implications

Our theoretical framework combines the agency and resource-dependence theories. The impact of BI on IPO valuation depends on the importance of the value-creation and value-protection roles played by the board. The change in the relative importance of the two roles determines a U-shaped relationship between BI and firm age. Corporate governance is particularly important for young and innovative firms (where the resource-dependence theory applies, and governance acts as a value-creation device), as well as for mature firms and for companies where ownership and control are separated (where the agency theory applies, and governance serves as a value-protection mechanism for minority shareholders).

Practitioner/Policy Implications

We show that corporate governance is a significant factor affecting the valuation of an IPO company. The importance of BI varies substantially with the knowledge intensity of the industry, the separation between ownership and control, and the age of the listing company.