Michele Meoli

Board Independence, Ownership Structure and the Valuation of IPOs in Continental Europe

Manuscript Type. Empirical. Research Question/Issue. We combine the value‐creation and value‐protection views of the board of directors to study the impact of board independence (BI) on the value of the firm at the time of its initial public offering (IPO). Research Findings/Insights. We conduct our analysis on a sample of 969 firms that went public in France, Germany, and Italy between 1995 and 2011. We show that BI is a critical factor in the valuation of IPO firms. Our results support both the value‐creation and value‐protection roles of the board of directors. The relative importance of the two roles of the board varies over time, with value‐creation (value‐protection) dominating in IPOs of young (mature) companies. Theoretical/Academic Implications. Our theoretical framework combines the agency and resource‐dependence theories. The impact of BI on IPO valuation depends on the importance of the value‐creation and value‐protection roles played by the board. The change in the relative importance of the two roles determines a U‐shaped relationship between BI and firm age. Corporate governance is particularly important for young and innovative firms (where the resource‐dependence theory applies, and governance acts as a value‐creation device), as well as for mature firms and for companies where ownership and control are separated (where the agency theory applies, and governance serves as a value‐protection mechanism for minority shareholders). Practitioner/Policy Implications. We show that corporate governance is a significant factor affecting the valuation of an IPO company. The importance of BI varies substantially with the knowledge intensity of the industry, the separation between ownership and control, and the age of the listing company.

Short covering and price stabilization of IPOs

Underwriters underprice Initial Public Offerings (IPOs) and often, immediately after, repurchase shares in an attempt to stabilize the price. This ancillary service is not mandatory and can be provided by underwriters in the first month of trading. Using a sample of Italian IPOs, we investigate whether the price stabilization activity is carried out when actually needed. We document that only half of the IPOs that require this service are actually stabilized after going public. The fees charged by underwriters are not informative about the provision of this ancillary activity. Rather, the underwriters reputation is negatively associated with the stabilization activity. Negative price revisions and negative (or low) underpricing also drive the provision of price stabilization.

University spatial competition for students: the Italian case

ABSTRACT University spatial competition for students: the Italian case. Regional Studies. The ability to attract students has become crucial for the sustainability of universities, especially in Southern Europe, where the decrease of governmental funding has been dramatic following the financial crisis. By using a competing destinations model on the student flows to 75 Italian universities in the period 2003–12, and modelling university competition with respect to different market segmentations, the paper provides evidence that Italian universities operated under competition forces in the last decade. Results hold when controlling for universities’ educational offer, trying different definitions of university attractiveness, excluding private academic institutions and limiting the analysis to non-selective courses.

Governance and Efficiency of Microfinance Institutions Empirical Evidence from Sri Lanka

Using a sample of Sri Lankan microfinance institutions (MFIs), we investigate the impact of several governance mechanisms on MFI efficiency, expressed in terms of the latter’s dual objectives of financial sustainability and outreach. Results reveal that smaller and gender-diverse boards have a positive impact on financial efficiency. Results also show that MFIs in which the chief executive officer (CEO) chairs the board and a woman holds the CEO position are less efficient in terms of poverty outreach.

The Effects of the Specialization of Private Equity Firms on their Exit Strategy

We investigate how industry and stage specialization of Private Equity (PE) firms affect the likelihood to exit investments by means of trade sales, Initial Public Offerings (IPOs), or Secondary Buyouts (SBOs). Our empirical analysis relies on competing risks models. Using a sample of 818 Leveraged Buyouts (LBOs) by US and European PE firms over the period 2000-2015, we find that both industry and stage specializations of PEs increase the likelihood to exit via IPO, whereas only industry specialization positively affects the likelihood of divesting through a trade sale. Finally, SBOs are more likely for non-specialized investors.

PhD funding as a determinant of PhD and career research performance

This article focuses on the effects of PhD funding on research performance both during the degree and throughout researchers’ careers as measured through publications and citations. This analysis draws from a representative sample of researchers holding a doctorate based in Portugal and finds that those funded by grants during the PhD perform better than the self-funded ones. It also finds that different PhD funding sources produce different outcomes. PhD grants positively affect research performance during the PhD and throughout the career, when compared with research project grants. We argue that the latter funding scheme has more limited effects because of the constraints typical of early stage researchers involved in research project dynamics.

Are IPO Underwriters Paid for the Services They Provide

More reputable underwriters are paid more for taking companies public, because they are expected to provide a better service. However, independently from their reputation, underwriters provide different optional services to the firms they take public. We question whether the services provided are related to the gross spreads. Based on declarations in the prospectuses of Italian IPOs, we find that asking underwriters to stabilize the price does increase the spread. Issuers can therefore pay lower fees by facing the risk of no aftermarket support for their stocks. Conversely, liquidity support does not drive the spread. We further investigate whether the underwriters’ declarations are actually pursued, and find that in general, they do seem to act according to the issuers’ interests. Nevertheless, the fees charged are not informative about the provision of these services. Rather, other factors such as negative price revisions and negative (or low) underpricing drive the provision of these services.

The new institutional governance of Italian state universities: what role for the new governing bodies?

In 2010, a comprehensive reform required Italian state universities to restructure their institutional governance by revising their statutes. This interpretative paper aims to evaluate whether the Italian reform is congruent with its declarations, examine the variations in the implementation within the same country of a unitary national regulation and assess whether Italian state universities have incorporated the principles of the new law coherently with its political aims. Our analysis shows gaps both in the decision stage, wherein state regulation is in contrast with the declared intent to increase autonomy, and in the implementation stage. In our view, Law 240 aimed to change the administrative board role from a democratic to a partnership model, while the dominant board model is now the stakeholder model (or, in several cases, quasi-democratic).

Forecasting winner IPOs

ABSTRACT IPOs underperform on average. Nevertheless, the skewed distribution of returns offers the chance to gain extremely high rewards (e.g., identifying the “next Microsoft“, as discussed by Loughran and Ritter, 1995). Hinging on this argument, this paper proposes a new method to help investors screen IPOs for the high-performing tail of the returns distribution. Using a straightforward definition of “winner IPOs” based on buy-and-hold abnormal returns, this study employs logistic regression to forecast whether a firm is still a top performer 1, 2 or 3 years after listing, relying only on publicly available information. Investors using our forecasting model would always have an adjusted rate of successful predictions higher compared to a naïvely classification that consider all IPOs as “winners”.

The effects of public policies in fostering university spinoffs in Italy

ABSTRACT Performance-based research funding systems in the European Union include a number of established spinoffs among the measures of universities’ third mission. Through a longitudinal study on the establishment of 1254 spinoffs during 1999–2015 from 85 Italian state universities, we find that the introduction of such a policy increased the number of academic spinoffs. However, the rate of creation of academic spinoffs increased in regions with higher skilled unemployment and in universities with fewer academic career opportunities, rather than in more research-oriented or more prestigious universities. These results cast doubt on the appropriateness of measures based on the sheer number of academic spinoffs in evaluating the third mission of universities.