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| Author: | Chahine, S. Tohme, N.S. |
| Title: | Is CEO duality always negative? An exploration of CEO duality and ownership structure in the Arab IPO context |
| Journal: | Corporate governance
2009 : MAR, VOL. 17:2, p. 123-141 |
| Index terms: | corporate governance chief executive officers employee ownership agency theory arab states transaction costs securities |
| Language: | eng |
| Abstract: | This article investigates the connections between initial public offering (IPO) underpricing, CEO duality, and strategic ownership in 12 Arab countries located in the Middle East and North Africa (MENA) region. Using all IPOs from January 2000 until July 2007, an average IPO underpricing of 184.1 per cent is documented, the phenomenon more pronounced in firms having CEO duality. However, strategic shareholders, such as corporations and various industry-related investors, likely play a monitoring role as underpricing appears to be lower in firms with both CEO duality and strategic shareholder ownership. Furthermore, the negative relation between underpricing and strategic blockholding is stronger for foreign strategic ownership than for domestic strategic ownership. Evidence is provided on the role of foreign strategic owners in reducing agency conflicts and information asymmetries within an environment where firms are likely affected by the cultural issues connected to political ties and family involvement. Suitable regulations for an effective and stable financial system in Arab countries are discussed and evidence on the positive effect of market openness to foreign shareholders is provided. |
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