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- Title
Educational Qualifications, Business Experience and Diversity Factors of Independent Audit Committee Members and an IPO's First-Day Returns.
- Authors
Van der Zahn, J.-L. W. Mitchell
- Abstract
The primary objective of this paper is to examine the association between the seven personality features, spanning three major themes: (i) qualifications and credentials; (ii) business and Initial Public Offering (IPO) launch experience; and (iii) diversity of independent audit committee members and the level of first-day returns. This paper is one of the first (particularly outside the US) to investigate linkages between audit committee personality features and first-day returns. The analysis uses a sample of 322 Singapore IPOs listing on the Stock Exchange of Singapore (SGX) from January 1, 1997 to December 31, 2004. The empirical results obtained suggest no overwhelming association between the personality features of IPO audit committees and first-day returns. Rather, the findings suggest only some specific personality features (e.g., presence of an independent audit committee member with accounting qualifications and credentials) are of significance with others (e.g., gender diversity of independent audit committee members) having no association. Also, results do not suggest a major category of personality features (i.e., qualifications and credentials, business and IPO launch experience, or diversity) is associated with first-day returns. Time also does not appear to affect the results of this study. As personality features tended to increase rather than lower an IPO's cost of capital, or had no influence at all, the findings of the study generally do not support some policymakers' arguments for the introduction of mandated uniform audit committee structures. Rather, the results support flexibility to determine the properties of the audit committee.
- Subjects
SINGAPORE; AUDITORS; GOING public (Securities); AUDIT committees; STOCK exchanges
- Publication
ICFAI Journal of Audit Practice, 2008, Vol 5, Issue 2, p7
- ISSN
0972-9070
- Publication type
Article