We are grateful to the participants of the 2005 Academy of Management Conference (Hawaii, USA), Shaker Zahra, Mike Wright, David Citron, the editor, and two anonymous referees for their helpful comments on previous versions of this paper.
The Effects of Information Disclosure and Board Independence on IPO Discount*
Article first published online: 26 MAR 2008
© 2008 Blackwell Publishing Ltd
Journal of Small Business Management
Volume 46, Issue 2, pages 219–241, April 2008
How to Cite
Chahine, S. and Filatotchev, I. (2008), The Effects of Information Disclosure and Board Independence on IPO Discount. Journal of Small Business Management, 46: 219–241. doi: 10.1111/j.1540-627X.2008.00241.x
- Issue published online: 26 MAR 2008
- Article first published online: 26 MAR 2008
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.