The Influence of Corporate Governance Structure towards Underpricing
Abstract: This study aims to
analyze the influence of corporate governance structure on underpricing when
firms perform an Initial Public Offering (IPO). This study is based on the
signaling theory, stating that the existence of proper corporate governance
structure at the time the firm conducting IPO will give the firm a high quality
signal to potential investors. The corporate governance structure tested
includes the size of Board of Commissioners (BOC), the level of independence of
the Board of Commissioners, and the existence of an audit committee. The
hypothesis testing is done using a multiple regression model with a sample of
95 observations from firms doing IPOs listed on the Indonesia Stock Exchange
during the period of 2005-2012. The results of this study provide empirical
evidence that: (1) the size of Board of Commissioners is negatively correlated
and affects underpricing, (2) the level of independence of the Board of
Commissioners has no effect on underpricing, (3) the existence of an audit
committee has no effect on underpricing, (4 ) corporate governance structure
(the BOC size, the independence of the Board of Commissioners, and the
existence of audit committees) simultaneously has a positive and significant
correlation to underpricing.
Keywords: audit committee,
board of commissioners, board independence, corporate governance, underpricing
Author: Arif Wahyu Hidayat,
Retno Kusumastuti
Journal Code: jpadministrasinegaragg140055
