INTERACTION EFFECTS BETWEEN INTERNAL GOVERNANCE MECHANISMS ON THE COMPONENTS OF INITIAL RETURNS DURING THE IPO

摘要

Our work provides an analysis of the interaction effects between internal governance mechanisms on the components of initial returns during the listing period. The application of multivariate regressions on a sample of 110 IPO French companies during 2005-2010, has allowed us to conclude that the different interactions between these mechanisms significantly influence the level of under / overpricing. Indeed, the positive relationship between internal governance mechanisms and overpricing reflects a substitutability relationship. In contrast, the complementarity effect comes from the negative relationship characterizing the combination of governance mechanisms and the underpricing. Thus, the interactions effects between institutional ownership, board structure and under / overpricing are not conforming to the existence of a complementarity or substitutability relationship between these variables given the absence of a significant combination between these variables.