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We document that global board reforms are associated with a significant reduction in IPO underpricing. The effect is amplified for IPOs with greater agency problems and mitigated for IPOs certified by reputable intermediaries, IPOs with greater disclosure specificity, and IPOs in countries with better shareholder protection and stringent financial reporting regulations. Furthermore, global board reforms have led to an improvement in the long-term market performance, proceeds, and subscription level of IPOs, and have enhanced board independence in the issuing firms. Our findings suggest that global board reforms have strengthened board oversight in the issuing firms, leading to less underpriced IPOs.

We analyze the role of firm-level corporate governance in determining the precommitment payout policy of emerging market firms and investigate if there is a precommitment lifecycle effect. Unlike previous studies for the U.S. firms, we only find evidence of precommitment among relatively well-governed firms, who combine good governance with large dividend payouts to shareholders and large debt-related repayments to creditors. We also document a strong precommitment lifecycle effect. Firms in the growth and mature stages of their lifecycle tend to use both debt and dividends to precommit to investors, with an increasing proportion of dividends in total payout measures. Our results are robust to an array of control variables, alternate payout proxies and market setting, firm-level corporate governance and addresses any potential endogeneity concerns in the sample.

Liquidity flow between regions with different levels of temporary financial constraints has received insufficient attention. This study takes advantage of a natural opportunity: Chinese capital markets clearly distinguish between foreign direct investment firms and firms with foreign institutional investment. Using the distinctive categorization of institutional holding structures in China, we find that foreign controlled enterprises were associated with an extraordinary increase in dividend payouts during the Global Financial Crisis, with concomitant underinvestment. Our results suggest that foreign-controlling shareholders extracted liquidity through dividends, highlighting a previously ignored channel for global transference of liquidity, with concomitant agency costs.

This study examines if and how does venture capital’s experience, as measured by venture capital age, specialization and historical investment influence post-IPO performance and growth of firms. We find that venture capital experience has significant positive effects on long-run performance measures, even after controlling for venture capital selectivity. In addition, we find that VC-backed firms exhibit better corporate governance mechanisms. Those firms have significantly higher probability of allocating ownership to senior executives than non-venture backed firms and are able to better align the interests of the executives and the shareholders. In addition, venture backed firms are associated with more independent directors, and have less duality and ownership concentration problems. Identification concerns are addressed by using instrumental variables. Our work supports the bulk of value that VC adds is the result of VC monitoring and involvement in corporate governance. Hence, we contribute to the literature on corporate finance and corporate governance in emerging markets by examining the impact of institutions.

Newly privatized firms increase dividends after divestment, and also pay significantly higher dividends compared to always-private firms. We examine a sample of 83,468 firm-years (358 privatized and 4,894 always-private firms) across 26 countries and show that the dividend premium is significantly positively related to new agency costs induced by privatization and is associated with levels of increased operating efficiency and higher earnings. The premium manifests in both civil and common law countries, but is significantly higher in civil law countries. Our findings hold invariant to home-country economic development or to the cross-country and temporal variation in the dividend tax penalty.