Do financial expert CEOs matter for newly public firms?

Gounopoulos, Dimitrios and Loukopoulos, Panagiotis and Loukopoulos, Georgios (2019) Do financial expert CEOs matter for newly public firms? In: 2019 European FMA Conference, 2019-06-12 - 2019-06-14, University of Strathclyde.

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    Abstract

    In this paper we analyse the relation between financial expert CEOs and the long-term viability of Initial Public Offering (IPOs). We uncover strong evidence that IPO firms run by financial expert CEOs have a lower probability of failure and longer time to survive in the aftermarket. In an attempt to identify the underlying causes of this relationship, we find that CEOs with a career background in finance get better access to the IPO market, as evidenced by lower absolute revisions during bookbuilding and a lower amount of money left on the table. In addition, they exhibit lower volatility in the immediate after market, stronger stock market and higher operating returns. Taken together, our results show that financial expertise is a crucial factor in determining the success of an IPO.