This paper proposes to include corporate governance characteristics in the explanation of underpr... more This paper proposes to include corporate governance characteristics in the explanation of underpricing at the time of IPOs. It shows that the investment banks and the issuers take the characteristics of the corporate board into account when valuing the issue, while investors adjust for the ownership structure in the aftermarket. Moreover, empirical tests provide some proofs about a simultaneous relation between the initial underpricing and the offer price-to-book, and suggest that price adjustment in the aftermarket includes the board characteristics as valued in the offer price.
Page 1. 2 Marketing Financial Claims Abstract We examine a comprehensive set of 540pre-IPO analys... more Page 1. 2 Marketing Financial Claims Abstract We examine a comprehensive set of 540pre-IPO analyst reports made available to investors and the broker's sales force in the course of marketing equity IPOs in France over the period 1990-2002. ...
ABSTRACT This study provides new evidence that both differential interpretations and private info... more ABSTRACT This study provides new evidence that both differential interpretations and private information production spur trading volume for a sample of 144 preliminary earnings announcements in the French markets. After partitioning the sample into preliminary ...
Building on the institutional perspective on capital markets, we examine the process of legitimat... more Building on the institutional perspective on capital markets, we examine the process of legitimation that underpins investor valuation of initial public offerings in the context of institutional polycentricism. We focus on the impact of board interlocks of the CEO and internal and external board members on investor perceptions of initial public offering firms in the United States and United Kingdom. We find that the extent of board members’ interlocks relates positively to the extent of the CEO’s interlocks, but this relationship is stronger in the United Kingdom than in the United States. More extensive interlocks lead to higher valuations in the United Kingdom than in the United States. This is the result of differences in institutional confluences that underpin corporate governance in the two culturally related countries.
In this paper, we investigate the macroeconomic response to exogenous shocks, namely the COVID-19... more In this paper, we investigate the macroeconomic response to exogenous shocks, namely the COVID-19. We conjecture that the sensitivity of an economic system to an exogenous shock is endogenous on its characteristics and ability to counter a shock. We use the COVID-19 crisis as an exogenous shock, and we argue that a higher income inequality is likely to lead to a greater negative impact of an exogenous shock on economic growth. We validate our expectations using different inequality indexes. In further robustness tests, we confirm our conclusions using different proxies for economic conditions. JEL Codes: A10, I14, I15
Research SummaryWith data on 1,156 venture capitalist (VC)‐backed U.S. initial public offerings (... more Research SummaryWith data on 1,156 venture capitalist (VC)‐backed U.S. initial public offerings (IPOs), we find that the initial level of Chief Executive Officer (CEO) human capital (HC) when a firm receives its first VC investment is negatively related to the likelihood of changing CEO before IPO. The distance between a firm and its lead VC has a positive effect on the likelihood and this effect is stronger when the initial CEO HC is lower. These results suggest that as a larger distance amounts to greater cost of VC direct monitoring, VC is more compelled to change CEO, especially when initial CEO HC is lower. Controlling for the endogeneity of CEO change, we find that CEO change before IPO has a positive relationship with the firm's IPO valuation and changes in operating performance.Managerial SummaryChanging CEO prior to IPO is common in startups, especially in those backed by VCs. We argue that VC can monitor a portfolio firm in two ways (which are not mutually exclusive): ...
Trainees experience significant stress in the operating room, with potentially adverse effects on... more Trainees experience significant stress in the operating room, with potentially adverse effects on performance and learning. Psychological resilience explains why some individuals excel despite sign...
This study examines whether auditor–client economic bonding and corporate governance moderate the... more This study examines whether auditor–client economic bonding and corporate governance moderate the adverse effects of principal–principal agency problems on earnings quality in U.K.‐listed family firms. We find that although earnings management is lower in family firms, there is a higher tendency of earnings management for those firms with economic bonding. However, such an impact may be moderated by good governance mechanisms where the latter may alleviate the adverse effects of the lack of auditor independence on the association between earnings management and family firms.
Purpose Social media have recently become an important strategic marketing tool to increase firm ... more Purpose Social media have recently become an important strategic marketing tool to increase firm value. Based on an integrated theoretical framework, this study aims to examine the market reaction at the time of the creation of a Twitter platform for 312 firms from the Fortune 500 firms. Design/methodology/approach To test the hypotheses related to the effect of social media platforms on firm value, the event history analysis (EHA) was used, also known as event study, usually designed to examine the impact of a historical phenomenon for the US Fortune 500 firms that developed a Twitter platform. Findings A significant market reaction was found around the starting date of Twitter activities for the subsample of firms that are not contaminated by any other corporate announcements, but not for the overall sample. The market reaction is higher for firms with two-way interaction strategies rather than one-way messaging in both the uncontaminated subsample and the overall sample. It is hi...
... conceptual and empirical gaps still exist. First, most prior research is focused on mature fi... more ... conceptual and empirical gaps still exist. First, most prior research is focused on mature firms, and very ... This is in contrast with prior research (Ho et al., 2006) that concentrates on mature US firms, which shows that small firms ...
This paper studies the impact of five dimensions of venture capitalist (VC) power on the likeliho... more This paper studies the impact of five dimensions of venture capitalist (VC) power on the likelihood that VCs hold board seats in their portf olio firms at the initial public offering (IPO) as well as the effect of VC board representation on IP O performance. The five dimensions of VC power are based on Finkelstein's (1992) four dimens ions of power which are ownership power, structural power (i.e. the VC's rank within the fir m's financial hierarchy), expert power (i.e. VC industry specialization), prestige power (i.e. VC r eputation), plus controlling power (i.e. how pivotal the VC is to the voted decision). We find t hat all five dimensions of power have a significantly positive impact on the likelihood of VC board representation. In turn, underpricing and the IPO premium are higher when VCs hold board seats, which is consistent with both the grandstanding and management support hypotheses. When VC board membership and IPO performance are simultaneously determined, the...
Abstract: This paper investigates the relationship between underpricing and the investors' i... more Abstract: This paper investigates the relationship between underpricing and the investors' interest prior to and after the IPO day. The empirical study, conducted on 305 French issues, shows a first-day abnormal return of 17.13% and a significant mispricing over the three ...
This paper proposes to include corporate governance characteristics in the explanation of underpr... more This paper proposes to include corporate governance characteristics in the explanation of underpricing at the time of IPOs. It shows that the investment banks and the issuers take the characteristics of the corporate board into account when valuing the issue, while investors adjust for the ownership structure in the aftermarket. Moreover, empirical tests provide some proofs about a simultaneous relation between the initial underpricing and the offer price-to-book, and suggest that price adjustment in the aftermarket includes the board characteristics as valued in the offer price.
Page 1. 2 Marketing Financial Claims Abstract We examine a comprehensive set of 540pre-IPO analys... more Page 1. 2 Marketing Financial Claims Abstract We examine a comprehensive set of 540pre-IPO analyst reports made available to investors and the broker's sales force in the course of marketing equity IPOs in France over the period 1990-2002. ...
ABSTRACT This study provides new evidence that both differential interpretations and private info... more ABSTRACT This study provides new evidence that both differential interpretations and private information production spur trading volume for a sample of 144 preliminary earnings announcements in the French markets. After partitioning the sample into preliminary ...
Building on the institutional perspective on capital markets, we examine the process of legitimat... more Building on the institutional perspective on capital markets, we examine the process of legitimation that underpins investor valuation of initial public offerings in the context of institutional polycentricism. We focus on the impact of board interlocks of the CEO and internal and external board members on investor perceptions of initial public offering firms in the United States and United Kingdom. We find that the extent of board members’ interlocks relates positively to the extent of the CEO’s interlocks, but this relationship is stronger in the United Kingdom than in the United States. More extensive interlocks lead to higher valuations in the United Kingdom than in the United States. This is the result of differences in institutional confluences that underpin corporate governance in the two culturally related countries.
In this paper, we investigate the macroeconomic response to exogenous shocks, namely the COVID-19... more In this paper, we investigate the macroeconomic response to exogenous shocks, namely the COVID-19. We conjecture that the sensitivity of an economic system to an exogenous shock is endogenous on its characteristics and ability to counter a shock. We use the COVID-19 crisis as an exogenous shock, and we argue that a higher income inequality is likely to lead to a greater negative impact of an exogenous shock on economic growth. We validate our expectations using different inequality indexes. In further robustness tests, we confirm our conclusions using different proxies for economic conditions. JEL Codes: A10, I14, I15
Research SummaryWith data on 1,156 venture capitalist (VC)‐backed U.S. initial public offerings (... more Research SummaryWith data on 1,156 venture capitalist (VC)‐backed U.S. initial public offerings (IPOs), we find that the initial level of Chief Executive Officer (CEO) human capital (HC) when a firm receives its first VC investment is negatively related to the likelihood of changing CEO before IPO. The distance between a firm and its lead VC has a positive effect on the likelihood and this effect is stronger when the initial CEO HC is lower. These results suggest that as a larger distance amounts to greater cost of VC direct monitoring, VC is more compelled to change CEO, especially when initial CEO HC is lower. Controlling for the endogeneity of CEO change, we find that CEO change before IPO has a positive relationship with the firm's IPO valuation and changes in operating performance.Managerial SummaryChanging CEO prior to IPO is common in startups, especially in those backed by VCs. We argue that VC can monitor a portfolio firm in two ways (which are not mutually exclusive): ...
Trainees experience significant stress in the operating room, with potentially adverse effects on... more Trainees experience significant stress in the operating room, with potentially adverse effects on performance and learning. Psychological resilience explains why some individuals excel despite sign...
This study examines whether auditor–client economic bonding and corporate governance moderate the... more This study examines whether auditor–client economic bonding and corporate governance moderate the adverse effects of principal–principal agency problems on earnings quality in U.K.‐listed family firms. We find that although earnings management is lower in family firms, there is a higher tendency of earnings management for those firms with economic bonding. However, such an impact may be moderated by good governance mechanisms where the latter may alleviate the adverse effects of the lack of auditor independence on the association between earnings management and family firms.
Purpose Social media have recently become an important strategic marketing tool to increase firm ... more Purpose Social media have recently become an important strategic marketing tool to increase firm value. Based on an integrated theoretical framework, this study aims to examine the market reaction at the time of the creation of a Twitter platform for 312 firms from the Fortune 500 firms. Design/methodology/approach To test the hypotheses related to the effect of social media platforms on firm value, the event history analysis (EHA) was used, also known as event study, usually designed to examine the impact of a historical phenomenon for the US Fortune 500 firms that developed a Twitter platform. Findings A significant market reaction was found around the starting date of Twitter activities for the subsample of firms that are not contaminated by any other corporate announcements, but not for the overall sample. The market reaction is higher for firms with two-way interaction strategies rather than one-way messaging in both the uncontaminated subsample and the overall sample. It is hi...
... conceptual and empirical gaps still exist. First, most prior research is focused on mature fi... more ... conceptual and empirical gaps still exist. First, most prior research is focused on mature firms, and very ... This is in contrast with prior research (Ho et al., 2006) that concentrates on mature US firms, which shows that small firms ...
This paper studies the impact of five dimensions of venture capitalist (VC) power on the likeliho... more This paper studies the impact of five dimensions of venture capitalist (VC) power on the likelihood that VCs hold board seats in their portf olio firms at the initial public offering (IPO) as well as the effect of VC board representation on IP O performance. The five dimensions of VC power are based on Finkelstein's (1992) four dimens ions of power which are ownership power, structural power (i.e. the VC's rank within the fir m's financial hierarchy), expert power (i.e. VC industry specialization), prestige power (i.e. VC r eputation), plus controlling power (i.e. how pivotal the VC is to the voted decision). We find t hat all five dimensions of power have a significantly positive impact on the likelihood of VC board representation. In turn, underpricing and the IPO premium are higher when VCs hold board seats, which is consistent with both the grandstanding and management support hypotheses. When VC board membership and IPO performance are simultaneously determined, the...
Abstract: This paper investigates the relationship between underpricing and the investors' i... more Abstract: This paper investigates the relationship between underpricing and the investors' interest prior to and after the IPO day. The empirical study, conducted on 305 French issues, shows a first-day abnormal return of 17.13% and a significant mispricing over the three ...
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Papers by Salim Chahine