BOARD COMPOSITION, SHARE OWNERSHIP, AND 'UNDERPRICING' OF U.K. IPO FIRMS.

Using a sample of 251 IPOs in the United Kingdom, this paper examines interlinks between executive and non executive characteristics, share ownership, and short-term performance measured in terms of share offer 'underpricing.' It argues that executives' power and previous experience directly affect ex ante choice of nonexecutive directors and their ownership interests in the firm. These endogenously developed governance factors may be used by IPO teams strategically to reduce the extent of underpricing. However, there is a selective response of investors to different board characteristics and share ownership structure. [ABSTRACT FROM AUTHOR]