The effect of board diversity and independence on IPO underpricing - An investigation on the Swedish market

Abstract: This paper aims to study the effect that board independence and diversity have on IPO underpricing. It is expected that through signalling, these factors might have a negative relationship with underpricing. Listings between 2015-01-01 - 2018-12-31 on the two Swedish stock exchanges Nasdaq Stockholm and Nasdaq First North are investigated and the final sample consisted of 188 observations. The quantitative research methodology was done using an OLS regression. The regression showed no statistical significance for the relationship between board diversity and underpricing. However, a weakly statistically significant positive relationship was found between Independence and Underpricing. Three interaction terms were created in order to investigate possible relationships between independence and diversity on underpricing. An interaction effect with weak statistical significance was found between Independence from company and Diversity.