MIMETIC ISOMORPHISM IN THE GOVERNANCE OF IPO COMPANIES IN ITALYDownload This Article
Alberto Barbesta, Giancarlo Giudici, Stefano Lugo
In order to comply with listing requirements and overcome information asymmetries, listing companies may be encouraged to adapt themselves with market standards („isomorphism‟) in the setting of governance devices in order to reduce the perceived uncertainty and obtain legitimacy towards investors. In this work we evaluate the isomorphism of IPO companies with respect to the board characteristics (i.e. board size and members‟ age). By analyzing a sample of 121 companies listed from 1999 to 2008 on the Italian Exchange, we find that mimetic strategies are frequent in IPO companies, and that the majority of them exhibit a reduction in the differences of board characteristics in the year after the flotation, compared to listed firms in the same sector. The percentage of mimicking companies is even larger if we consider only companies that introduce changes in the board composition. Multivariate analyses suggest that isomorphism strategies are targeted to signal the IPO firm‟s quality, and are an alternative to issuing underpriced shares.
Keywords: Corporate Governance, Isomorphism, Board of Directors
How to cite this paper: Barbesta, A., Giudici, G., & Lugo, S. (2010). Mimetic isomorphism in the governance of IPO companies in Italy. Corporate Ownership & Control, 8(1), 117-122. http://dx.doi.org/10.22495/cocv8i1p10