Abstract

An initial public offering (IPO) represents one of the final stages in the life of a small firm as it transitions from private to public. In this paper the experience of directors is examined to determine the extent of the role they play in ensuring a successful listing. Unique data from 122 IPOs on the Swedish Stock Exchange have been examined in a search for the effect of director experience on aftermarket performance. Specific aspects of director experience within a board, such as interlocking directorships and average tenure, are connected to the underpricing of Swedish IPOs. Contrary to expectations, no statistically significant relationship was found between long-run aftermarket performance and director experience at the time of an IPO. This suggests that the previous experience of directors, as measured in earlier studies, is less relevant to long-term aftermarket performance in Sweden compared to other countries studied in the literature review. This emphasises the importance of examining different institutional contexts.

Keywords: Initial Public Offerings, The Board of Directors, Corporate Governance, Underpricing, Aftermarket Performance

How to Cite:

Thorsell, A. & Isaksson, A., (2014) “Director Experience and the Performance of IPOs: Evidence from Sweden”, Australasian Accounting, Business and Finance Journal 8(1), 3-24. doi: https://doi.org/10.14453/aabfj.v8i1.2